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ACCA Applied Knowledge · Business and Technology · Financial information provided by business

A company's management accounts are prepared monthly, with no legal format, while its published financial statements follow IFRS. Which statement about the difference is correct?

Management accounts can be designed freely to meet internal needs, while published financial statements must follow a prescribed framework such as IFRS. Internal reports have no statutory format or audit requirement, whereas external statements serve outside users and are regulated.

  1. AManagement accounts can be designed freely to meet internal needs, whereas published statements follow a prescribed frameworkCorrect
  2. BManagement accounts must follow IFRS but need not be accurate
  3. CPublished financial statements are prepared only for managers
  4. DManagement accounts must be audited annually by law

Explanation

Management accounts are internal, so their content, format and frequency are set by management. Published statements are for external users and must comply with the regulatory framework such as IFRS, and management accounts have no legal audit requirement.

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