ACCA Strategic Professional · Advanced Audit and Assurance (International) · Specific assignments
Falcon & Co is engaged to review the financial statements of Maple Retail under ISRE 2400 (Revised). Before accepting, the practitioner discusses the engagement terms with management. Which matter must be agreed as a precondition?
Management must acknowledge its responsibility for preparing the financial statements under the applicable framework and for the internal control needed to produce statements free from material misstatement, plus giving access to information. The practitioner does not prepare the statements or guarantee freedom from fraud.
- AThat management acknowledges responsibility for preparing the financial statements and for the internal control needed to prepare them free from material misstatementCorrect
- BThat the practitioner will take responsibility for preparing the financial statements in accordance with IFRS
- CThat the practitioner will test all transactions in the final quarter
- DThat the report will state that the financial statements are free from fraud
Explanation
Acceptance requires that management acknowledges and understands its responsibility for preparing the financial statements under the applicable framework, for internal control, and for giving the practitioner access to information and people. The practitioner does not take over preparation, and a review does not involve testing all transactions or guaranteeing freedom from fraud.
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