Objectives of Financial Statement Audit

The objectives of a financial statement audit (ISA 200 style) are:

1. To obtain reasonable assurance

   • The auditor aims to obtain reasonable (high but not absolute) assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error.

   • This allows the auditor to conclude whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework.

2. To express an opinion

   • Based on that assurance, the auditor issues a written audit opinion on the financial statements for the users (usually shareholders).

3. To report and communicate as required

   • The auditor must communicate findings appropriately to those charged with governance (e.g. the Board / Audit Committee), and comply with any additional reporting duties required by laws, regulations, or standards.

You can phrase it in exam form like this:

(i) provide reasonable assurance on fair presentation,
(ii) express an independent opinion, and
(iii) report/communicate appropriately to users and those charged with governance.

Short Notes

1. Required under Companies Act 2016.
2. Every registered company must audit FS annually.
3. Purpose → Auditor gives opinion:

✔ Are FS prepared correctly?

✔ Do FS follow financial reporting framework?