Question

Most annual reports now include a report of management to the stockholders. In this report, which group has the primary responsibility for the preparation and integrity of the financial statements?

a. Management
b. The audit committee of the company's board of directors
c. The company's internal audit staff
d. The company's CPAs

Answer 1

Management has the primary responsibility for the preparation and integrity of the financial statements in an annual report, with oversight by the board of directors.

Step-by-step explanation:

In an annual report, the group with the primary responsibility for the preparation and integrity of the financial statements is management. The management team of a public company works under the oversight of the board of directors, which is elected by the shareholders. While the audit committee of the board and the company's CPAs play crucial roles in reviewing and certifying the financial statements for accuracy and compliance, it is the management that is ultimately responsible for the financial information presented to stockholders.