Question

Which of the following is incorrect statement for financial auditing?

• A. Financial Auditing is a systematic and dependent examination by qualified persons
• B. The primary purpose of financial Auditing is to express an opinion as to the truthfulness and fairness of the financial statements.
• C. The scope of financial Auditing extends to all types of entities - commercial as well as non-commercial.
• D. In Financial Auditing, the opinion or judgments of the auditor on the assertions made by the management in financial statement is communicated through audit report to the client or the shareholders.

Hint:

Logic Tip: Independence is the backbone of auditing profession.

Answer 1

The Correct Option is A

Step 1: Understanding the Question:

• We must identify the INCORRECT statement about financial auditing.

Step 2: Detailed Explanation:

• Financial auditing is a systematic and INDEPENDENT examination by qualified persons; independence is its essence.
• Statement (1) calls it 'dependent', which is wrong.
• Statements (2), (3) and (4) correctly describe the purpose (opinion on truth and fairness), the scope (all entities) and the reporting (audit report to shareholders).

Step 3: Final Answer:
The correct option is (A) Financial Auditing is a systematic and dependent examination by qualified persons.