Which of the following statements is true about an audit?
A) Only an independent CPA must perform an audit.
B) An auditor may use the accounting standards defined by his or her accounting firm to perform an audit.
C) Verifying information from third parties is not a necessary step in an audit.
D) The process of preparing a company's annual financial statements is called auditing.

Question

Quizplus · Accepted Answer

Only an independent CPA (Certified Public Accountant) is qualified to perform an audit, as they are required to maintain objectivity and independence from the company being audited.

Answer: B
 An auditor must use the generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS) to perform an audit, rather than their accounting firm's own standards.

Answer: C
 Verifying information from third parties, such as banks and customers, is a necessary step in an audit to ensure the accuracy and completeness of a company's financial statements.

Answer: D
 The process of preparing a company's annual financial statements is accounting, while auditing involves examining and verifying those statements to ensure that they are accurate and complete.

Which of the Following Statements Is True About an Audit