Financial statements are the means by which accountants communicate to external users.
Recent ﬁnancial reporting scandals have focused attention on the accounting profession and its role in the preparation of these statements and the audits performed on the statements.
1. Who is responsible for the preparation of the ﬁnancial statements that are included in a company’s annual report?
2. Who performs an audit of the ﬁnancial statements referred to in part (1)?
3. Why is it important for those who are responsible for an audit of the ﬁnancial statements to be independent of those who prepare the statements? Explain your answer.
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