Question

In the audit of historical financial statements, what accounting criteria is most common?

A) Regulatory accounting principles
B) Applicable international accounting standards
C) Applicable US accounting standards
D) B and C
E) All of the above

Answer 1

The audit of historical financial statements commonly uses applicable US accounting standards (GAAP) and applicable international accounting standards (IFRS). Therefore, the correct answer is D) B and C.

Step-by-step explanation:

In the audit of historical financial statements, the most common accounting criteria are applicable US accounting standards and applicable international accounting standards. These represent the norms and rules that accountants follow in preparing financial statements. In the United States, this would generally be the Generally Accepted Accounting Principles (GAAP), whereas, internationally, the International Financial Reporting Standards (IFRS) are often used. Therefore, the correct answer to the provided question is D) B and C.

Indeed, the audit of historical financial statements often involves assessing compliance with both Generally Accepted Accounting Principles (GAAP) in the US and International Financial Reporting Standards (IFRS). By considering these standards, auditors ensure that financial statements align with the respective accounting principles, enabling a comprehensive evaluation of financial reporting accuracy and adherence to established guidelines. This approach reflects a broader perspective, encompassing the relevant regulations and standards utilized in different jurisdictions for accurate and reliable audits.