How does an investigation usually differ from a routine financial statement audit?
Correct answer: C. An investigation addresses a specific question or suspected irregularity
- A. An investigation is performed only to prepare annual accounts
- B. An investigation always covers every transaction in the entity
- C. An investigation addresses a specific question or suspected irregularity
- D. An investigation never uses documentary or testimonial evidence
Explanation
An investigation is normally directed at a particular matter, such as suspected fraud, misconduct or a disputed claim. A routine audit has a broader objective of expressing an opinion on the financial statements.
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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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