What is the primary objective of an independent external audit of financial statements?
ATo guarantee 100% detection of all minor fraud
BTo express an opinion on whether financial statements are presented fairly in all material respects
CTo prepare management's annual tax returns
DTo direct daily business operations
Explanation
Core Concept: The principal goal of external financial audit is giving reasonable assurance that financial statements are free of material misstatements and present a true and fair view. Context/Distractors: External auditors do not guarantee zero fraud detection nor prepare tax returns or manage company operations. Exam Tip/Key Fact: An audit provides reasonable assurance, not absolute guarantee.
Exam Relevance
- Topic: Auditing
- Subtopic: Audit Objectives & Standards
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