Briefly highlights the management responsibilities relating to the financial statements
The management responsibilities in relation to the financial statements include the following:
1. The overall responsibility for the preparation and presentation of the financial statements.
2. Identifying the financial reporting framework to be used in the preparation and presentation of the financial statements.
3. Designing, implementing and maintaining internal controls relevant to the preparation and presentation of financial statements that are free from material misstatement whether due to fraud or error.
4. Selecting and applying appropriate accounting policies.
5. Making accounting estimates that are reasonable in the circumstances.
Management Responsibilites relating Financial Statements
Preparation and Presentation of the Financial Statements
An acceptable financial reporting framework should be used by the management in the preparation and presentation of the financial statements. Management should also identify financial reporting framework which is used in preparation and presentation of financial statements. Financial statement should be prepared for general purpose and it should also fulfill the requirement of local laws and regulations.
Designing, Implementing and maintaining internal controls
Management should agree and acknowledge for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Internal Control system is very important for determining the time and extent of audit procedures.
Selection and application of appropriate Accounting Policies
Management should select and apply accounting policies properly in accordance with relevant standards , rules and regulations so that financial statements providing a true and accurate picture of the state of affairs of the entity. selection and application of appropriate accounting policies depends upon the competence of relevant personnel.
Making Reasonable Accounting estimates
Management should make reasonable accounting estimates keeping in view the substance of transactions and their impact on financial statements. Accounting estimates should be made in accordance with normal accounting practices prevailing in the market.
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