CIMA Exam CIMAPRA17-BA4-1 Topic 4 Question 104 Discussion

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

Question #: 104
Topic #: 4

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 Judy at Dec 07, 2024, 01:13 PM

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Belen

6 days ago

I bet the directors wish they could just cook the books and skip the audit. But hey, rules are rules, even for the big shots!

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Selma

11 days ago

Looks like the directors are trying to pull a fast one with option B! Good thing we have those pesky auditors to keep them honest.

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Telma

1 months ago

C is the correct answer. The external audit provides an independent opinion on the true and fair view of the financial statements, which is crucial for building confidence.

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2 months ago

I think the answer is B.

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