FIN 400 Critical Thinking 2. Management Responsibility. Finance Essay

Management Responsibility
Name
Institution
Management Responsibility
The management of an organization is charged with the sole responsibility of establishing and maintaining objectivity and integrity of its financial information. This is driven by the need for conveying reasonable assurance with regards to the reliability of financial reporting in accordance with the Generally Accepted Accounting Principles (GAAP). Therefore, the management is better placed to maintain adequate internal control over financial reporting (Gibson, 2009). A firm’s internal control system is backed up by a series of written policies which the employees are expected to abide by. For maximum output, the internal auditors continually review the control and accounting systems.
* Who has the responsibility for financial statements?
The management is responsible for the financial statements of a company hence the need for the establishment and maintenance of a credible system of internal accounting alongside other control measures.
* What is the role of the accountant (auditor) as to the financial statements?
The auditor’s role is to ensure the compliance of the financial information with the established internal control procedures through keen analysis of the reports, practices and records. The financial statements audit is aimed at boosting the credibility of the firm’s financial position (Williams & Dobelman, 2017). Additionally, the auditor verifies the assets and liabilities within the organization by comparing the items present to the documented list. The assessment is entirely based on the framework convened by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control. To complete the audit, he also estimates the adequacy of internal control systems in a questionnaire.
* Accountants (auditors) are often included as defendants in lawsuits that relate to the financial statements. Speculate as to why this is the case.
In most instances, accountants are incl...