What is a significant difference between financial and performance audits?

The choice highlighting that financial audits assess the accuracy of financial statements, while performance audits evaluate efficiency and effectiveness, accurately captures the fundamental distinction between these two types of audits. Financial audits primarily focus on determining whether an organization’s financial statements are presented fairly and in accordance with applicable accounting standards. They verify the accuracy, completeness, and compliance of financial records, providing assurance to stakeholders regarding financial reporting.

On the other hand, performance audits go beyond just the financial aspect; they assess how well an organization is achieving its goals and objectives. These audits look at operational efficiency, effectiveness of programs, resource utilization, and the achievement of performance targets. The emphasis is on ensuring that resources are being used effectively and that programs are delivering the intended results.

The other options do not correctly represent the key differences. The frequency of audits varies based on the organization’s needs and regulatory requirements, rather than being inherently more frequent for performance audits. Similarly, both types of audits can focus on compliance, depending on the nature of the audit objectives, and the size of the audit team can differ based on the scope and requirements of each audit rather than one being categorically larger than the other.