Choose the correct statement about audits of corporations:
A) Outside auditors are paid by the government for auditing the financial statements of corporations.
B) Revenue Canada performs audits of corporations' financial statements.
C) Public corporations (those whose stock are traded on exchanges) are subject to annual audit as to their compliance with GAAP.
D) It is the employees of the firm being audited who perform the annual audit of the financial statements of that firm.

Question

Quizplus · Accepted Answer

Public corporations (those whose stocks are traded on exchanges) are required to be audited annually to check their compliance with GAAP (Generally Accepted Accounting Principles). A third-party auditing firm is hired by the corporation's management to perform the audit, and the audited financial statements are then used by shareholders, lenders, and other stakeholders to assess the financial health of the corporation. Neither outside auditors nor the government pay for these audits, and it's not the employees of the firm being audited who perform the audit. Revenue Canada is responsible for tax audits, not audits of financial statements.

Choose the Correct Statement About Audits of Corporations