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

Why is obtaining sufficient appropriate evidence important in auditing?

1. To enhance the auditor's reputation.

2. To justify the audit expenses incurred.

3. To afford a reasonable basis for the opinion.

4. To meet legal requirements for audit completion.

The correct answer is: To afford a reasonable basis for the opinion.

Obtaining sufficient appropriate evidence is crucial in auditing because it provides a reasonable basis for forming the auditor's opinion on the financial statements. This process is fundamental to ensuring the reliability and accuracy of the audit. The gathered evidence must be both sufficient, meaning adequate in quantity to support the conclusions, and appropriate, meaning relevant and reliable to the audit's context. When an auditor assesses the financial statements, they need to determine whether they are presented fairly in all material respects according to the relevant financial reporting framework. The evidence obtained supports this determination, allowing the auditor to express an opinion on whether the financial statements are free from material misstatement. This opinion is vital for users of the financial statements, such as investors and creditors, who rely on the auditor's work to understand the financial health and compliance of the entity. While enhancing the auditor's reputation, justifying audit expenses, and meeting legal requirements can be ancillary benefits or considerations, the primary aim is to ensure that sufficient and appropriate evidence substantiates the auditor's opinion, making it the centerpiece of the auditing process.