CAF-8 · Chapter 1 · Question 2 of 10
Which of the following is an inherent limitation of an audit that prevents the auditor from providing absolute assurance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The use of sampling techniques and the fact that most audit evidence is persuasive rather than conclusive.
Explanation
Auditors cannot test every transaction due to time and cost constraints, so they use sampling. Additionally, evidence gathered is usually persuasive rather than absolute, and management may collude to conceal fraud.
More Concept and Need for Audit MCQs
- Q4An assurance engagement consists of a three-party relationship. Who are the three parties involved in a statutory audit?
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- Q7Which of the following is NOT an element of an assurance engagement?
- Q8In the context of the financial statements, what does 'presentation' primarily refer to according to ISA 315?