Final answer:
Yes, an audit provides reasonable assurance of detecting material misstatement due to Fraudulent Financial Reporting and/or Misappropriation of Assets.
Step-by-step explanation:
An audit is a systematic and independent examination of an organization's financial statements, records, transactions, and operations to ensure that they are accurate and comply with relevant laws and regulations.
The objective of an audit is to provide reasonable assurance that the financial statements are free from material misstatements, including those resulting from fraudulent financial reporting and misappropriation of assets.
Auditors use various audit procedures and techniques to gather evidence and assess the risk of material misstatement, including procedures specifically designed to detect fraud.
For example, auditors may perform tests of controls to evaluate the effectiveness of an organization's internal controls in preventing and detecting fraud. They may also perform substantive procedures, such as analytical procedures, to identify unusual or unexpected trends or relationships that may indicate the presence of fraud.
In addition, auditors may conduct interviews and inquiries, perform physical inspections and observations, and review relevant documents and records to gather evidence that supports or contradicts the presence of fraud.