Final answer:
Auditors aim to obtain sufficient appropriate audit evidence related to material misstatement risks to form a judgment; imperfect information can impact price, quantity, and quality. Option 3 is the correct choice.
Step-by-step explanation:
The objective of auditors is to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement. This process of evidence gathering allows auditors to form a basis for their judgment about the financial statements they are examining. To reduce the risk of imperfect information, auditors perform various procedures, such as inspecting documents, observing processes, and obtaining external confirmations. These procedures help auditors to assess whether the financial statements provide a true and fair view of a company’s financial position.
Imperfect information can significantly affect business decisions and market outcomes, influencing price, quantity, and quality of goods and services. Companies may implement internal controls and information systems improvements to reduce the risk of inaccurate or incomplete information. The impact of imperfect information on financial statements, if not addressed, can result in stakeholders making decisions based on misleading information, potentially harming the company's reputation and financial standing.
The correct option from the choices provided is option 3) sufficient appropriate audit evidence regarding the assessed risks of material misstatement.