Who normally has primary responsibility for preparing financial statements subject to an audit?
Correct answer: C. The entity's management
- A. The external auditor
- B. The audit committee alone
- C. The entity's management
- D. The tax authority
Explanation
Management is responsible for preparing the financial statements and maintaining the underlying records and controls. The external auditor independently examines those statements and reports an opinion on them.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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