Financial audits are performed to obtain assurance as to whether an organization’s financial statements are free of material misstatements. During a financial audit, an auditor reviews financial statements to provide a formal auditor’s opinion. This opinion is attached to the front of the organization’s financial statements to provide assurance that they are fairly presented – in other words, that they meet generally accepted accounting principles and have been scrutinized by an independent auditor.
Absolute assurance cannot be attained because of:
- factors such as the use of judgment and the use of testing of the data underlying the financial statement;
- inherent limitations of internal control; and
- the audit evidence available to the auditor is persuasive rather than conclusive in nature.