CFA Practice Question

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CFA Practice Question

Which of the statements about the audit function is most likely accurate?
A. Internal audit guarantees that a company's risk management, governance, and internal control processes are operating effectively.
B. The audit function describes the systems, controls, policies, and procedures which a company has in place to examine its operations and financial records.
C. Internal auditors conduct annual audits of the company's financial records and prepare the financial statements and auditors' reports which are eventually presented to shareholders for approval at the AGM.
Explanation: Internal audit cannot guarantee that a company's risk management, governance, and internal control processes are operating effectively. It can only provide independent assurance that they are operating effectively.

It is the external auditors and not the internal auditors who conduct the annual audits of a company's financial records. Their audit generates financial statements and audit reports which are eventually presented to shareholders for approval.

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