Responsibilities of Management and Auditor

Responsibilities

Management

✔ Prepare financial statements

✔ Use proper accounting policies

✔ Maintain internal controls

✔ Follow laws

Auditor

✔ Give opinion on FS

✔ Provide reasonable assurance FS are correct

✔ Report on internal control system (ICS)

✔ Work with care & skill

Aspect	Management’s Responsibilities	Auditor’s Responsibilities
Preparation of financial statements	Prepare and present the financial statements	Do not prepare the financial statements; audit what management has prepared
Accounting framework	Ensure the financial statements are prepared in accordance with the applicable financial reporting framework (e.g. MFRS/IFRS)	Assess whether the financial statements are prepared, in all material respects, in accordance with that framework
Internal control	Design, implement, and maintain internal control relevant to reliable financial reporting	Understand and evaluate relevant controls to plan the audit, but not to give an opinion on internal control (unless specifically engaged to do so)
Completeness and accuracy of records	Maintain proper accounting records and make sure transactions are recorded accurately and on time	Obtain sufficient appropriate audit evidence to determine whether the recorded information is free from material misstatement
Prevention and detection of fraud	Primary responsibility to prevent and detect fraud through controls, ethics, supervision, etc.	Assess the risk of material misstatement due to fraud and design audit procedures to respond, but cannot guarantee all fraud will be detected
Going concern	Assess the company’s ability to continue as a going concern and make required disclosures if there is significant doubt	Evaluate management’s going concern assessment and conclude whether the use of going concern basis and related disclosures are appropriate
Judgments and estimates	Make reasonable accounting estimates (e.g. impairment, provisions) and disclose assumptions	Challenge management’s estimates for reasonableness and bias, and conclude whether they result in material misstatement
Providing information	Give the auditor unrestricted access to all relevant information, documents, and personnel	Request information, perform tests, and exercise professional scepticism when evaluating what management provides
Financial statement responsibility	Take responsibility for the financial statements as their own	Express an independent opinion on whether the financial statements are free from material misstatement and are fairly presented
Communication to users	Approve and sign the financial statements before issuance	Issue the auditor’s report addressed to the shareholders / those charged with governance