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In the context of audits, what does 'scope' refer to?

  1. Duration of the audit

  2. Extent of the review

  3. Personnel involved

  4. Funding sources

The correct answer is: Extent of the review

In the context of audits, 'scope' specifically refers to the extent of the review. This encompasses the boundaries and parameters set for the audit, which could include which records are examined, the time periods covered, and the specific areas of an organization that will be reviewed. A well-defined scope is essential for an audit as it outlines what will be included in the examination and ensures that the audit is focused and effective. Having a clear scope helps auditors know what to look for and allows them to allocate resources effectively to gather relevant information. This fosters a systematic approach to the audit process, ensuring that significant areas of concern are addressed while minimizing the risk of overlooking important details. Defining the scope carefully also lays the groundwork for the audit's objectives and expected outcomes, guiding the overall methodology.