Answer (B) is correct. The purpose of an operational audit is examining and evaluating systems of internal control, overall company operations and the quality of performance in carrying out assigned responsibilities. The internal auditors compare the results of the operations with standards for performance or output. The focus of an operational audit is on the three "E"s: efficiency, effectiveness and economy. In an operational audit, the internal auditor would express an opinion as to the efficiency and effectiveness of an entity’s activities and make recommendations for improvements.
Answer (A) is incorrect. The purpose of a financial statement audit is to evaluate the assertions made by management on the organization’s financial statements and to issue an opinion on the fairness of the statements. A financial statement audit is performed by outside, independent auditors, not by internal auditors. In an independent financial statement audit, the auditor would not express an opinion as to the efficiency and effectiveness of an entity’s activities and make recommendations for improvements.
Answer (C) is incorrect. The purpose of a financial statement audit is to evaluate the assertions made by management on the organization’s financial statements and to issue an opinion on the fairness of the statements. A financial statement audit is performed by outside, independent auditors, not by internal auditors. In an independent financial statement audit, the auditor would not express an opinion as to the efficiency and effectiveness of an entity’s activities and make recommendations for improvements.
Answer (D) is incorrect. A compliance audit is performed in order to determine whether an organization is conforming to certain specific requirements of its policies, procedures, standards, or laws and governmental regulations. Thus, in a compliance audit, the auditor would not express an opinion as to the efficiency and effectiveness of an entity’s activities and make recommendations for improvements.
