Which statement is true about the auditor's objectives and management assertions?

• A. The auditor's objectives follow and are closely related to management assertions
• B. Management's assertions follow and are closely related to the auditor's objectives
• C. The auditor's primary responsibility is to find and disclose fraudulent management assertions
• D. Assertions about presentation and disclosure deal with whether the accounts have been included in the financial statements at appropriate amounts

Answer: (A)

The relationship being tested is that the auditor’s objectives are built around testing management’s representations. Management makes assertions about the financial statements, and the auditor plans procedures specifically to obtain evidence about those assertions. So the auditor’s objectives follow from and are closely tied to what management asserts, making this statement the best description of how the two relate.

The other ideas are less accurate. Management’s assertions aren’t driven by the auditor’s objectives; rather, the assertions come from management and the auditor designs tests to examine them. The auditor’s role isn’t solely to uncover fraud and disclose it; the objective is to detect material misstatements from any cause, whether fraud or error. And about presentation and disclosure, those assertions concern how information is presented and disclosed, not just whether amounts are recorded at the right figure, so that choice doesn’t fully capture the relationship between objectives and assertions.