What is management's responsibility for the financial statements?

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AcadiFi · Accepted Answer

Management — not auditors — owns the financial statements. The 'Management's Responsibility for the Financial Statements' statement (required in 10-Ks and annual reports) asserts: (1) preparation in conformity with US GAAP or IFRS; (2) selection of appropriate accounting policies and reasonable estimates; (3) design, implementation, and maintenance of internal control over financial reporting (ICFR); (4) assessment of going concern for at least 12 months; (5) prevention and detection of fraud. Under SOX Section 302, the CEO and CFO personally certify that the filing is free of material misstatements, fairly presents financial condition, and that ICFR is effective (or discloses weaknesses). SOX Section 404 requires an annual ICFR report and — for accelerated filers — auditor attestation. Example diagram below.

What is management's responsibility for the financial statements?

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