Question

2- Is CPA responsible for preparing financial statements? Discuss the responsibility and functions of CPA with evidence of annual report. Also name the different Financial statements that audited by external auditors at from Al Marai 2019 repot

Answer 1

Financial statements are a formal record of the financial activities of a business, person or other entity over a period of time and/or the financial position of a business, person or other entity at a point in time. Management is responsible for preparing financial statements; however, in some cases organizations with- out financial expertise may engage the services of CPAs to prepare financial statements on their behalf.

Annual financial statements prepared for stakeholders are usually prepared in accordance with an applicable financial reporting framework specified in law or regulation. For profit-oriented private entities financial statements normally include:

• balance sheet showing assets, liabilities and equity as at year end

• statement of income showing the results of operations for the year

• statement of retained earnings summarizing changes in retained earnings during the year

• statement of cash flows showing operating, investing, and financing activities and how these activities affect the cash position

• notes to financial statements: an integral part of financial statements, which provide additional explanations and details concerning financial statement items.

As well, there may be schedules attached providing more detailed information relating to items disclosed in the financial statements.

Management is responsible for preparing financial statements; however, in some cases organizations with- out financial expertise may engage the services of CPAs to prepare financial statements on their behalf.