Accounting · Auditing
Identify the INCORRECT statement in respect of the inherent limitations of an audit:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1There is a possibility that management may intentionally withhold relevant financial information.
- 2An audit is an investigation into alleged wrongdoings.✓
- 3The preparation of financial statements involves subjective decisions on many financial statement items made by management.
- 4Due to constraints of time and cost, the auditor may check transactions on a sampling basis.
Correct answer
An audit is an investigation into alleged wrongdoings.
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