An audit is
A) performed by the firm's private bookkeepers.
B) not necessary if the firm used generally accepted bookkeeping procedures.
C) required by many bankers and lenders who are trying to validate a firm's accounting statements.
D) a waste of the firm's resources.
E) a guarantee that a firm hasn't "cooked" the books.

Question

Quizplus · Accepted Answer

A firm's audit is required by many bankers and lenders who are trying to validate the firm's accounting statements. This is because the audit provides an objective evaluation of the accuracy and completeness of a firm's financial statements, which can give lenders greater confidence in the firm's ability to repay loans. While an audit is not necessarily required by law, it is often seen as a best practice for maintaining the integrity of a firm's financial reporting.

An Audit Is