The Main Purpose of an Audit Is to Assure Users

question 65

Multiple Choice

The main purpose of an audit is to assure users of the financial information about the:

• A)Effectiveness of the internal controls of the company
• B)Selection of the proper GAAP when preparing financial statements
• C)Proper application of GAAS during the examination
• D)Accuracy and completeness of the information

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Definitions:

Res Ipsa Loquitur

A legal doctrine that allows for the presumption of negligence in a lawsuit, given the type of accident or injury could not have occurred without negligence.

Negligence

Failure to exercise the care that a reasonably prudent person would exercise in similar circumstances, resulting in harm.

Severity

The extent of seriousness or gravity of a situation, condition, or event.

Reasonable Person

A hypothetical individual in society who exercises average care, skill, and judgment in conduct and is often used as a standard in legal reasoning.