SmallCircle a, i. ii, iii and iv SmallCircle b, ii and iv c, i and iii SmallCirc

Question

SmallCircle a, i. ii, iii and iv SmallCircle b, ii and iv c, i and iii SmallCircle d, ii and iii Which of the following statements about external auditing are correct? Professional ethics prohibit the external auditor from having a direct financial interest in the companies being audited Auditors should be an unbiased, professionally sceptical reviewer of the financial statements Auditors guarantee the accuracy of financial statements Auditors are responsible to render a competent opinion on the fairness of the financial statements When financial statements are not presented fairly in accordance with GAAP, auditors will issue a disclaimer Select one: SmallCircle a, i, ii, iii, iv and v SmallCircle b, i, ii, iv and v c. ii, iii and iv SmallCircle d, I, ii, and iv U Ltd made purchases and sales of inventory in the last three months of operation as follows:

Explanation / Answer

The correct option regarding question on External Auditing is: (d) [(i), (ii) and (iv)].

External auditors have to be independent and not related to the company in any way. They should be unbiased in auditing the financial statements. But they only conclude whether the financial statements fairly represent the financial position or if they conform to the required accounting standards like GAAP or IFRS. They do not guarantee accuracy of reports. Finally, if the statements do not conform to GAAP, auditors issue an Adverse report and not a Disclaimer.

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