ACCA Audit and Assurance (F8) Practice Exam

Which of the following is an objective of the audit regarding grants to beneficiaries?

1. Employment of beneficiaries

2. Verification of bona fide status of grants

3. Monitoring of beneficiaries' personal projects

4. Encouragement of volunteer work

The correct answer is: Verification of bona fide status of grants

The objective related to audits concerning grants to beneficiaries centers on ensuring that the funds provided are being allocated and utilized appropriately, which includes verifying the bona fide status of grants. This means that auditors aim to confirm that the grants awarded are legitimate, aligning with the intended purpose and conditions set by the grantor. By verifying bona fide status, the auditor assesses whether the expenditure incurred by the beneficiary is in compliance with the rules and regulations associated with the grant, which may include examining the eligibility of the parties involved, the documented intentions behind the grant distribution, and ensuring that the resources are used effectively for the intended objectives. This process enhances accountability and transparency, reinforcing trust among stakeholders about how funds are being managed and reported. Regarding the other options, employment of beneficiaries, monitoring personal projects, and encouragement of volunteer work, while they may hold importance in the broader context of a grant program, they do not directly align with the fundamental objectives of an audit. The audit’s primary focus is to ascertain that the grants themselves are valid and used for their genuine purpose rather than overseeing personal initiatives or promoting volunteerism. Thus, the verification of bona fide status is central to maintaining the integrity of the grant process.