ACCA Applied Knowledge · Financial Accounting · The context and purpose of financial statements for external reporting
Which of the following is a duty of the external auditor rather than of those charged with governance?
The external auditor forms and reports an independent opinion on whether the financial statements comply with the applicable reporting framework. Designing internal controls, choosing accounting policies and maintaining accounting records all remain responsibilities of the directors and management.
- ADesigning and operating internal controls to prevent and detect fraud
- BSelecting appropriate accounting policies for the financial statements
- CForming and reporting an independent opinion on whether the financial statements are prepared in accordance with the applicable frameworkCorrect
- DEnsuring adequate accounting records are maintained throughout the year
Explanation
The auditor gives an independent opinion on the financial statements. Designing controls, choosing accounting policies and keeping records are management and director responsibilities. The auditor does not take on these duties, as this would impair independence.
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