CAF-8 · Chapter 1 · Question 1 of 10
Mr. Zaid, the CEO of Delta Manufacturing, believes that an external audit acts as a complete guarantee that no fraud exists within the company. What concept does Mr. Zaid's belief illustrate?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The expectation gap
Explanation
The expectation gap refers to the difference between the public's perception of an auditor's role (e.g., providing absolute guarantees against fraud) and the auditor's actual statutory responsibilities.
More Concept and Need for Audit MCQs
- Q3Under the Companies Act, 2017, what is the required timeframe for the appointment of the first external auditor by the directors of a…
- Q4An assurance engagement consists of a three-party relationship. Who are the three parties involved in a statutory audit?
- Q5An auditor identifies a misstatement in the financial statements of Horizon Ltd. The auditor must determine if it is material. Information…
- Q6Throughout the audit of Silverline Corp, the audit team remains alert to conditions indicating possible fraud, despite having audited the…
- Q7Which of the following is NOT an element of an assurance engagement?