Question

Which statement is correct concerning the relevance of various types of controls to a financial statement audit?

1) An auditor may ordinarily ignore the consideration of controls when a substantive audit approach is used.
2) Controls over the reliability of financial reporting are ordinarily most directly relevant to an audit, but other controls may also be relevant.
3) Controls over safeguarding assets and liabilities are of primary importance, while controls over the reliability of financial reporting may also be relevant.
4) All controls are ordinarily relevant to an audit.

Answer 1

2) Controls over the reliability of financial reporting are most directly relevant to an audit, but other controls may also be relevant.

Step-by-step explanation:

The correct statement concerning the relevance of various types of controls to a financial statement audit is option 2) Controls over the reliability of financial reporting are ordinarily most directly relevant to an audit, but other controls may also be relevant.

These controls, known as internal controls, are measures put in place by a company to ensure the accuracy and reliability of its financial statements. While controls over the reliability of financial reporting are of primary importance, controls over safeguarding assets and liabilities are also relevant.

It is important for auditors to consider and evaluate these controls in order to provide assurance on the accuracy and fairness of the financial statements.