Final answer:
In financial auditing, violations of the existence objective can be of greater concern than violations of the completeness objective because they may indicate fraud and have more severe consequences for the financial integrity of a company.
Step-by-step explanation:
The question deals with two objectives within financial auditing: the existence objective and the completeness objective. The existence objective is concerned with ensuring that all transactions and accounts that should be recorded have actually been recorded and exist. Conversely, the completeness objective seeks to ensure that there are no omissions—that all transactions that have occurred are included in the accounting records.
To determine the truth of the statement, understanding the implications of the two types of potential violations is necessary. If there is a violation of the existence objective - meaning some sales that are recorded might not actually have occurred - it may suggest fraudulent activity or material misstatement that could significantly distort the presented financial health of a company. This could subsequently affect decision-making of stakeholders who rely on accurate financial statements.
In contrast, failure to adhere to the completeness objective - missing out on recording some sales that did occur - might indicate negligence or inadequate internal control processes, which could be less of a threat in comparison to outright fraud, but still significant.
Considering the foregoing, it might be argued that violations of the existence objective are of greater concern since they can indicate fraudulent activity, which carries legal implications and can severely impact stakeholder trust and the company's financial presentation.