Many people confuse the responsibilities of the independent auditors and the cli

Question

Many people confuse the responsibilities of the independent

auditors and the client's management with respect to audited

financial statements.

a. Describe management's responsibility regarding audited financial

statements.

b. Describe the independent auditors' responsibility regarding

audited financial statement

c. Evaluate the following statement: "if the auditors disagree

with management regarding an accounting principle used in the

financial statement the auditors should express their views in the

notes to the financial statements."

Explanation / Answer

a. Management has primary responsibility for the fairness of the financial statements.
b. The auditors are responsible for performing an independent audit of the financial statements and issuing a report on them in accordance with generally accepted auditing standards.
c. The statement if false. The notes to the financial statements should contain only representations of management. The auditors should express their reservations in their report.

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