Which audit type would primarily assess the accuracy of financial data and supporting records?

Which audit type would primarily assess the accuracy of financial data and supporting records?

• A. Transaction audits
• B. Compliance testing
• C. System-based audits
• D. Post-completion audits

Answer: (A)

Focusing on the accuracy of financial data and the records that support it requires examining the finer detail of each entry. This is exactly what a transaction-focused audit does: auditors test individual transactions, vouching amounts to source documents, tracing postings from the source documents to the general ledger, and reconciling figures to ensure each entry is correct, complete, and properly authorized. This level of detail directly verifies that the financial records truly reflect what happened and are free from error or misrepresentation. The other types serve different aims. Compliance testing checks adherence to policies and regulations rather than the intrinsic accuracy of numbers. System-based audits look at the IT controls and the integrity of the information system as a whole. Post-completion audits assess outcomes after a project or activity is finished, rather than the ongoing accuracy of financial data.

Focusing on the accuracy of financial data and the records that support it requires examining the finer detail of each entry. This is exactly what a transaction-focused audit does: auditors test individual transactions, vouching amounts to source documents, tracing postings from the source documents to the general ledger, and reconciling figures to ensure each entry is correct, complete, and properly authorized. This level of detail directly verifies that the financial records truly reflect what happened and are free from error or misrepresentation.

The other types serve different aims. Compliance testing checks adherence to policies and regulations rather than the intrinsic accuracy of numbers. System-based audits look at the IT controls and the integrity of the information system as a whole. Post-completion audits assess outcomes after a project or activity is finished, rather than the ongoing accuracy of financial data.