Because managers can exercise professional judgment when preparing the financial statements for their company, the stakeholder should:
A)read the report of the external auditor.
B)place complete confidence in the financial data.
C)understand that management can be motivated to act in its own self-interests.
D)place no confidence in the financial data.

Question

Quizplus · Accepted Answer

While managers are expected to prepare the financial statements with integrity, they may be motivated to act in their own self-interests. Therefore, stakeholders should not place complete trust in the financial data and should read the report of external auditors to ensure accuracy and reliability. Placing no confidence in the financial data is an extreme response and not necessary if proper due diligence is exercised.

Because Managers Can Exercise Professional Judgment When Preparing the Financial