Audit and Assurance Practice Exam 2025 – The Complete All-in-One Guide for Exam Success!

The role of an auditor in relation to financial statements is primarily to provide an opinion on their reliability and fairness. This involves assessing whether the financial statements present a true and fair view of the company's financial position and performance, in accordance with the applicable financial reporting framework, such as GAAP or IFRS. Auditors evaluate the accuracy of the information presented and ensure that it is free from material misstatement, whether due to fraud or error. By performing substantive and compliance tests, the auditor gathers sufficient and appropriate evidence to form their opinion, which adds credibility to the financial statements for stakeholders like investors, creditors, and regulatory agencies.

In contrast, managing financial risks falls outside the auditor's responsibilities; it is typically a function of the company's management. Similarly, while auditors may review and assess the financial statements, they do not have the responsibility to prepare them, as this is the duty of the company's management. Conducting the operations of the company is also not a part of the auditor's role; auditors remain independent from the operational activities to preserve objectivity and impartiality in their assessment.