Final answer:
Collective investment funds are audited by external auditors to ensure that their financial records are accurate and reasonable. These audits are generally conducted annually and are crucial for maintaining investor trust and corporate governance. The correct option is a.
Step-by-step explanation:
Collective investment funds must be audited by external auditors. This process is integral to the overall corporate governance structure, which includes the board of directors and large shareholders such as mutual funds and pension funds. In the context of corporate governance, the role of external auditors is to review a company's financial records and to certify their accuracy. Such audits are typically performed on an annual basis, although the frequency can be more often if required by regulatory bodies or the fund's policies. The importance of these audits was highlighted by the case of Lehman Brothers, where corporate governance failed to provide accurate information, underscoring the necessity for rigorous and independent auditing for financial transparency.
The aim of these audits is to ensure the accuracy of financial reports, which supports the integrity of the financial market and protects investors' interests. An audit helps to maintain trust among investors by providing assurance that the financial statements fairly represent the fund's financial status. As such, one of the key objectives of these audits is to produce the required financial report that investors and regulators can rely upon.