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ACCA Applied Knowledge · Business and Technology · Accounting and finance functions within business organisations

Which of the following statements about the legal and regulatory requirements for accounting information is correct?

Financial statements must meet statutory and accounting standard requirements, whereas the form and content of management accounts are decided by the organisation to suit its own needs. Management accounts are not filed publicly or required to be audited, so the claim about discretion over format is the correct one.

  1. ABoth financial and management accounting reports must be filed publicly each year
  2. BNeither financial nor management accounting is subject to any legal requirement
  3. CFinancial statements are subject to statutory requirements, whereas the format of management accounts is decided by the organisationCorrect
  4. DManagement accounts must be audited, whereas financial statements need not be

Explanation

Companies are legally required to prepare financial statements to prescribed standards, and many must have them audited and filed. Management accounts are produced at management's discretion in whatever format suits their needs, and are not publicly filed or required to be audited.

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