CIMA Exam CIMAPRA17-BA4-1 Topic 3 Question 106 Discussion

Actual exam question for CIMA's CIMAPRA17-BA4-1 exam

Question #: 106
Topic #: 3

The majority of developed countries require publicly quoted companies and large companies to produce annual financial statements which are then audited by an external auditor.

Which of the following statements regarding the requirement for external audit is Incorrect?

AIndependent external audit gives confidence in the financial statements which is required as the directors have incentives to manipulate the financial statements presented to the shareholders

BAs the directors are responsible for the day-to-day management of the company, they hold more detailed information which is resolved by the presentation of financial statements to the shareholders and this needs to be guaranteed by independent external audit.

CIndependent external audit gives confidence in the financial statements by including the auditor's opinion on whether or not they show a true and fair view.

DAs the directors are responsible for the day-to-day management of the company, they hold more detailed information which is resolved by the presentation of financial statements to the shareholders and there is a need for this to be assured by independent external audit

Show Suggested Answer

Suggested Answer: B

by Otis at Jan 25, 2025, 02:26 PM

Limited Time Offer

25%

Off

Get Premium CIMAPRA17-BA4-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Annamaria

21 days ago

Option C is spot on. The auditor's opinion is the key to ensuring the financial statements present a true and fair view.

upvoted 0 times

King

3 days ago

I agree, the auditor's opinion is crucial for ensuring the accuracy of financial statements.

upvoted 0 times

...

Joana

23 days ago

Haha, I bet the directors would love to avoid that pesky external audit if they could. Good thing it's a legal requirement!

upvoted 0 times

...

Hector

24 days ago

Option D seems to be the correct answer here. The directors' detailed knowledge of the company does need to be verified by an external, independent audit.

upvoted 0 times

Cheryl

14 days ago

Yes, the independent external audit provides assurance to shareholders that the information presented is reliable and accurate.

upvoted 0 times

...

Murray

17 days ago

I agree, option D is correct. The external audit is necessary to ensure the accuracy of the financial statements.

upvoted 0 times

...

Osvaldo

1 months ago

I agree with Odelia, D is the correct answer because it emphasizes the need for assurance by external audit.

upvoted 0 times

...

Benton

1 months ago

I think option A is incorrect. The directors definitely have incentives to manipulate the financial statements, so an independent audit is crucial to ensure confidence in the figures.

upvoted 0 times