Question

Which of the following is not true about opinion on financial statement?

• A. The auditor should express an opinion on financial statements
• B. His opinion is no guarantee to future viability of business
• C. He is responsible for detection and prevention of frauds and errors in financial statements
• D. He should examine whether recognised accounting principle have been consistency

Answer 1

Answer: (C)

He is responsible for detection and prevention of frauds and errors in financial statements

Auditors maintain that an audit does not guarantee that all material misstatements will be detected due to the inherent limitation of an audit and that they can obtain only reasonable assurance that material misstatements in the financial statements will be detected.

However, users of financial information expect auditors to take steps to detect fraud during the audit. So, auditors cannot be held responsible for non-detection and not prevention of frauds and errors in financial statements.