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21 March, 09:30

What checks are there on the accuracy of these statements? (Select the best choice below.)

A. It is up to each investor to certify the accuracy of the financial statements.

B. Financial statements in form 10-K are required to be audited by a neutral third party, who checks them and ensures that the financial statements are prepared according to GAAP and that the information contained is reliable.

C. Financial statements are always sufficiently accurate so no checks are needed.

D. The accuracy of the firm's financial statements is certified by the firm's board of directors, which is the only required check.

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Answers (1)
  1. 21 March, 09:59
    0
    The correct answer is B

    Explanation:

    The checks which are there on the accuracy of the statements are:

    1. The corporation needed to hire or require the neutral party, which is known as the auditor in order to check the annual financial statements of the company, and also ensures that the financial statements are to prepared as per GAAP (generally accepted accounting principles). It should also offer the evidence to support the information reliability.

    2. The public companies need to use a common or general set of rules and the standard format while making the reports.

    3. The role of auditor is to review the financial statements and in addition Sarbanes-Oxley Act requires the CFO as well as CEO to attest personally to the accuracy of the financial statements.
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