Statements of Position



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The committee recommends that companies that disseminate annual reports include a report by management on the financial statements. The primary objective of the management report is to inform financial statement users of management's responsibility for those statements and the various means by which it is fulfilled. The management report should state that management is responsible for all the information in the annual report, whether audited or unaudited, and for the internal consistency of that information. Also, management should indicate that its responsibility for the financial statements includes making judgments and estimates and selecting accounting principles that are in accordance with generally accepted accounting principles appropriate in the circumstances. Because of cost-benefit considerations and other inherent limitations of the effectiveness of internal accounting control, management should make a representation phrased in terms of reasonable, rather than absolute, assurance that the objectives of internal accounting control are met. The composition and duties of the audit committee should be described or a cross-reference should be made to a separate section of the annual report or to a separate report of the audit committee where the description may be found. The management report should describe the role of the independent auditor to render an independent opinion on management's financial statements. If there has been a change in auditors, management should indicate whether the decision to change was recommended or approved by the audit committee and should offer to furnish upon request a copy of Form 8-K covering the change.

Publication Date


Relational Format



Corporation reports -- Auditing; Financial statements


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Tentative conclusions and recommendations of the reports by Management Special Advisory Committee; Exposure draft (American Institute of Certified Public Accountants), 1978, Dec. 8



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