CIMA Exam CIMAPRA17-BA4-1 Topic 7 Question 94 Discussion

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

Question #: 94
Topic #: 7

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 Laura at Aug 08, 2024, 04:01 AM

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Yolando

10 months ago

I'm not sure, but I think the answer is C.

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Trina

10 months ago

I agree with Georgene, I also think the answer is B.

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Margot

10 months ago

Wait, does this mean the directors can't be trusted? Shouldn't we just let them handle it themselves? Seems a bit like overkill if you ask me.

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10 months ago

Hmm, I think C is the correct answer here. The auditor's opinion is the key to ensuring confidence in the financial statements.

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Stefan

10 months ago

Yes, C is definitely the right choice. The auditor's opinion provides assurance on the true and fair view of the financial statements.

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Denny

10 months ago

I agree, C is the correct answer. The auditor's opinion is crucial for confidence in the financial statements.

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10 months ago

Option B does seem redundant, but it's important for the external audit to confirm the information provided by the directors.

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