Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

What is an auditor's primary responsibility concerning financial statements?

1. Drafting financial statements for the entity.

2. Providing comments on internal control environment.

3. Expressing an opinion based on the audit.

4. Ensuring the adoption of sound accounting policies.

The correct answer is: Expressing an opinion based on the audit.

An auditor's primary responsibility concerning financial statements is to express an opinion based on the audit. This opinion is formed after the auditor has gathered sufficient and appropriate evidence regarding the financial statements' accuracy, completeness, and compliance with applicable financial reporting standards. The opinion communicates to stakeholders whether the financial statements present a true and fair view of the entity's financial position and results of operations. This role is crucial because it instills confidence in users of the financial statements, such as investors, creditors, and regulatory agencies, about the reliability of the information provided. The auditor's independent assessment helps to mitigate the risk of material misstatement, whether due to fraud or error. While providing comments on the internal control environment and ensuring the adoption of sound accounting policies are important aspects of the audit process, they are not the primary responsibility of the auditor. Drafting financial statements is the responsibility of the management of the entity, not the auditor. Thus, expressing an opinion on the financial statements after a thorough examination is at the core of the auditor's role.