Which concept is primarily focused on the accuracy of reported financial statements during an audit?

The concept of valuation is fundamentally concerned with ensuring that the amounts reported in the financial statements are accurate and reflect the true worth of the assets, liabilities, and equity at the reporting date. During an audit, the auditor assesses whether the valuations of accounts are appropriate and in accordance with relevant accounting standards. This includes examining whether financial statement items are recorded at their correct amounts and ensuring that the methods used to value these items are consistent and appropriate for the circumstances.

Valuation involves confirming that estimates and fair value measurements used in the financial statements are reasonable and are based on sound methodologies, thus impacting the overall reliability and integrity of the financial reports. An accurate valuation is essential as it influences key decisions made by stakeholders who rely on these financial statements for their assessments of the entity's financial position and performance.