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CS Professional · Internal and Forensic Audit · Internal Controls

Under section 134(5), the Directors' Responsibility Statement of Sagar Pharma Ltd (listed) is being reviewed by its internal auditor. Which of the following is correctly required to be stated by the directors?

The directors must state that the annual accounts were prepared on a going concern basis, as section 134(5)(d) provides. The statement does not require guarantees of zero errors, personal verification of assets by auditors, or any assured dividend.

  1. AThat the annual accounts were prepared on a going concern basisCorrect
  2. BThat the company's auditors have personally verified every asset
  3. CThat the company has achieved zero errors in its accounting records
  4. DThat the directors guarantee a minimum dividend for the year

Explanation

Section 134(5)(d) requires the directors to state that the annual accounts were prepared on a going concern basis. The statement speaks of proper and sufficient care for adequate accounting records, not zero errors. It contains no auditor verification or dividend guarantee.

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