Question

A specific objective of an audit of a company's expenditure cycle is to determine whether all goods paid for have been received and charged to the correct account. This objective addresses which of the following primary objectives identified in the Standards?

1.Reliability and integrity of financial and operational information.
2.Compliance with laws, regulations, policies, procedures, and contracts.
3.Effectiveness and efficiency of operations and programs.
4.Safeguarding of assets.
A. 1, 2, and 4 only.
B. 2, 3, and 4 only.
C. 1 and 2 only.
D. 1 and 4 only.

Answer 1

The audit objective of ensuring goods paid for have been received and charged to the correct account relates to both the reliability and integrity of financial information and the safeguarding of assets. The correct answer to the primary standards objectives it addresses is 1 and 4 only (Option D).

Step-by-step explanation:

The specific objective of an audit of a company's expenditure cycle to ensure that all goods paid for have been received and charged to the correct account relates primarily to the reliability and integrity of financial and operational information and safeguarding of assets. Therefore, verifying goods received and correctly charged ensures that the reported financial information is accurate, which is intrinsic to the reliability and integrity of financial information. Moreover, it helps in the safeguarding of assets by ensuring that the company is not paying for goods that it did not receive or are not recorded properly.

When looking at the options provided in the question, the correct answer to which primary objectives identified in the Standards this audit objective addresses would be Option D: 1 and 4 only.