An independent audit of financial statements provides which level of assurance about the absence of material misstatement?
Correct answer: D. Reasonable assurance
- A. Absolute assurance
- B. Probable assurance
- C. Limited assurance
- D. Reasonable assurance
Explanation
An audit provides reasonable assurance because audit procedures and sampling cannot eliminate every risk of error. Absolute assurance is not normally possible in an audit due to judgment, estimation, and inherent limitations.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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