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ACCA Applied Knowledge · Financial Accounting · Duties and responsibilities of those charged with governance

Which of the following best describes the primary responsibility of the directors of a company in relation to its financial statements?

Directors must prepare financial statements that give a true and fair view, keep proper accounting records and safeguard the company's assets. Auditing is carried out independently by external auditors, standards are set by the IASB, and tax rates are set by governments, so those options are wrong.

  1. APreparing financial statements that give a true and fair view and safeguarding the company's assetsCorrect
  2. BAuditing the financial statements before they are issued to shareholders
  3. CSetting International Financial Reporting Standards for the company's sector
  4. DApproving the tax rates applied to the company's profits

Explanation

Directors are responsible for preparing financial statements that give a true and fair view (fair presentation) and for keeping proper accounting records and safeguarding assets. Auditing is the external auditor's role, standard-setting belongs to the IASB, and tax rates are set by governments.

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