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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Fraud and error

Which statement about responsibilities in respect of the financial statements of Norvik Ltd is correct under ISA 200 and ISA 210?

Management acknowledges, and the engagement terms record, its responsibility for preparing the financial statements and for internal control that enables statements free from material misstatement. The auditor's role is to express an opinion, while those charged with governance oversee financial reporting.

  1. AThe auditor is responsible for preparing the financial statements, and management only approves them
  2. BManagement acknowledges its responsibility for preparing financial statements and maintaining internal control, and this premise is agreed in the engagement termsCorrect
  3. CThose charged with governance have no responsibility for oversight of financial reporting
  4. DThe auditor is responsible for designing internal controls that prevent all misstatement

Explanation

ISA 210 requires the auditor to obtain management's agreement that it acknowledges and understands its responsibility for preparing the financial statements under the applicable framework and for internal control necessary for statements free from material misstatement. The auditor's responsibility is to express an opinion. Those charged with governance oversee financial reporting.

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