Which statement contrasts performance audits with financial audits?

Which statement contrasts performance audits with financial audits?

• A. A performance audit evaluates program outcomes, efficiency, and economy; financial audit verifies the accuracy of financial statements.
• B. A performance audit is less rigorous than a financial audit.
• C. A financial audit evaluates program outcomes.
• D. There is no difference between performance and financial audits.

Answer: (A)

Performance audits look at what a program achieves and how well resources are used, focusing on outcomes, efficiency, and economy. They ask whether the program is effective, whether it uses funds wisely, and how it could be improved. Financial audits, by contrast, concentrate on the reliability of financial information—checking that financial statements are accurate, transactions are properly recorded, and internal controls support truthful reporting in line with applicable standards. The statement that best contrasts the two says a performance audit evaluates program outcomes, efficiency, and economy, while a financial audit verifies the accuracy of financial statements. This distinction reflects their different purposes: one evaluates the effectiveness and use of resources in delivering services, the other ensures the integrity of financial reporting. The other options either misstate the focus (that one is automatically less rigorous, or that a financial audit evaluates program outcomes) or claim there is no difference, which isn’t accurate.

Performance audits look at what a program achieves and how well resources are used, focusing on outcomes, efficiency, and economy. They ask whether the program is effective, whether it uses funds wisely, and how it could be improved. Financial audits, by contrast, concentrate on the reliability of financial information—checking that financial statements are accurate, transactions are properly recorded, and internal controls support truthful reporting in line with applicable standards. The statement that best contrasts the two says a performance audit evaluates program outcomes, efficiency, and economy, while a financial audit verifies the accuracy of financial statements. This distinction reflects their different purposes: one evaluates the effectiveness and use of resources in delivering services, the other ensures the integrity of financial reporting. The other options either misstate the focus (that one is automatically less rigorous, or that a financial audit evaluates program outcomes) or claim there is no difference, which isn’t accurate.