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

Which statement about the responsibilities of directors for the financial statements of a company is correct?

Directors are responsible for preparing financial statements that give a true and fair view, and for related internal control, while the external auditor independently expresses an opinion on them. The auditor does not prepare the statements and shareholders do not prepare them either.

  1. AThe external auditor is responsible for preparing the financial statements and the directors for auditing them
  2. BDirectors are responsible for preparing financial statements that give a true and fair view, while the auditor gives an opinion on themCorrect
  3. CShareholders are responsible for preparing the financial statements at the annual general meeting
  4. DThe audit committee must prepare the financial statements in place of the directors

Explanation

Directors are responsible for preparing financial statements that present fairly (true and fair view) and for maintaining internal control. The external auditor independently gives an opinion on them. Reversing these roles, or assigning preparation to shareholders or the audit committee, is incorrect.

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