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NISM Certifications · NISM-Series-XV: Research Analyst · Company Analysis - Business and Governance

Which statement about the role of a company's auditors in governance is most accurate?

Statutory auditors provide an independent opinion on whether a company's financial statements give a true and fair view. They do not decide dividends, are appointed through shareholder approval, and do not guarantee future profitability, so their report supports the reliability of reported numbers.

  1. AStatutory auditors give an independent opinion on whether the financial statements give a true and fair viewCorrect
  2. BStatutory auditors set the company's dividend policy
  3. CStatutory auditors are appointed by the company's CEO alone without shareholder approval
  4. DStatutory auditors guarantee the company's future profitability

Explanation

Statutory auditors independently report whether financial statements present a true and fair view. They do not decide dividends, are appointed by shareholders and not by the CEO alone, and give no assurance about future profits.

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