Management Responsibility. Accounting, Finance, SPSS Essay

Management Responsibility
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Institutional Affiliation
Management Responsibility
Introduction
Financial statements reveal the precise picture of a company's financial health. These statements include the balance sheet, income, and cash flow statements. Many stakeholders are interested in the information disclosed in these documents. These include shareholders, vendors, the general public, potential investors, regulatory bodies, bondholders, lenders, and security analysts. This paper covers the case of 3M Company which is a technology company with diverse business interests such as Display and graphics, electronics, transportation and healthcare
Responsibility for financial statements
The management has the responsibility of ensuring the integrity of financial statements. Their sound judgment is necessary to prepare objective reports. The administration must follow the acceptable accounting procedures and standards in the United States. This will enable auditors to fully and independently verify the financial statements. To guarantee the integrity of financial statements, the management creates internal control systems and procedures. These schemes make sure that checks and balances are safeguarded when preparing the financial statements. They make sure that all transactions have been recorded. Also, they assign tasks to professionals who adhered to the highest standards of financial reporting. The internal control systems set outs the ethical codes and practices that the company's employees need to follow.
Role of auditors
An auditor's role is to ensure that company's financial statements are accurate. Their independent evaluation establishes whether a company is truthful in its financial reporting. Some of the information auditors are interested in include cash flow statements, tax returns, account balances, internal control systems, income statements, balance sheets, and financial reports. An auditor can either be internal or external. The regulatory authorities require that companies hire external auditors to verify their statements. During the scrutiny of financial documents, an auditor examines whether the company has followed the generally accepted accounting principles.
Auditors differ from accountants in the sense that their task is centered on figuring out the authenticity of financial documents. Through their actions, they can help to expose dishonest or fraudulent activities within a company. Auditors also help determine whether the company’s internal control systems are functioning effectively. The findings of auditors are significant in revealing whether a company committed a gross error in its accounting system. Auditors' reports promote public trust in companies across the United States. They encourage investors to put in funds in companies. Auditing also prevents management from misusing shareholder funds (McEnroe & Stanley, 2001). Further, it elim...