Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

Which of the following best characterizes the objective of an audit of financial statements?

1. To verify the accuracy of every transaction.

2. To express an opinion regarding the fairness of financial statements.

3. To identify fraud within the organization.

4. To ensure compliance with all legal regulations.

The correct answer is: To express an opinion regarding the fairness of financial statements.

The objective of an audit of financial statements is to express an opinion regarding the fairness of those financial statements in accordance with the applicable financial reporting framework. When auditors evaluate financial statements, they do so with the intent of determining whether these documents are free from material misstatement, whether due to fraud or error, and whether they present a true and fair view of the organization's financial position and performance. This opinion is typically communicated in the auditor's report, which provides users of the financial statements with assurance that the statements can be relied upon for decision-making purposes. The basis for this opinion hinges on the evidence gathered during the audit process, which includes testing the internal controls, examining financial records, and conducting inquiries. Verifying the accuracy of every transaction is impractical and not a goal of the audit, as this would require an exhaustive and time-consuming examination that is not feasible given the scope of most audits. Similarly, while auditors may identify instances of fraud, the primary purpose of the audit is not to uncover fraud but to provide a reasonable assurance that the financial statements are presented fairly. Finally, ensuring compliance with all legal regulations is typically outside the auditor's primary objective, as compliance is often the responsibility of management and may be assessed in different contexts such as regulatory audits rather