Answer (D) is correct . Policies and procedures relevant to a financial statement audit pertain to the entity’s ability to record, process, summarize, and report financial data consistent with the assertions in the financial statements. Other policies and procedures may not be relevant to a financial statement audit, e.g., those concerning the effectiveness, economy, and efficiency of certain management decision-making processes (AU 319). Production controls, such as quality control reports, may fall in the latter category.
Answer (A) is incorrect because It is designed to safeguard assets. Safeguarding assets is an objective inherent in the internal control structure relevant to a financial statement audit.
Answer (B) is incorrect because It is concerned with the reliability and accuracy of accounting data reported in financial statements.
Answer (C) is incorrect because It is concerned with the reliability and accuracy of accounting data reported in financial statements.
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