A financial statement audit must be conducted based on GAAP.

Name: A financial statement audit must be conducted based on GAAP.
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A financial statement audit is conducted based on auditing standards (such as Generally Accepted Auditing Standards (GAAS) in the United States or International Standards on Auditing (ISA) globally), not based on Generally Accepted Accounting Principles (GAAP), which are the guidelines for preparing the financial statements.

A Financial Statement Audit Must Be Conducted Based on GAAP