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CSEET · Economic and Business Environment · Elements of Corporate Governance

The Directors' Responsibility Statement under section 134(5) must state that, in the preparation of the annual accounts, the directors:

The statement must say that applicable accounting standards were followed, with proper explanation of any material departures. The law also expects reasonable and prudent judgments and estimates, so avoiding estimates altogether is not required, and dividend guarantees are not part of the statement.

  1. AFollowed the applicable accounting standards along with proper explanation of material departuresCorrect
  2. BGuaranteed a minimum dividend to all shareholders
  3. CAppointed the auditors without approval of members
  4. DAvoided any estimates or judgments in the accounts

Explanation

Section 134(5)(a) requires a statement that applicable accounting standards were followed with proper explanation relating to material departures. Judgments and estimates are permitted if reasonable and prudent, so the last option is wrong.

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