WHAT IS A FINANCIAL AUDIT?

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.

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