The primary responsibility for properly applying GAAP when communicating with investors and creditors through financial statements lies with a firm's auditors.

Question

Quizplus · Accepted Answer

The primary responsibility for properly applying GAAP when communicating with investors and creditors through financial statements lies with the firm's management. Auditors are responsible for expressing an opinion on whether the financial statements are fairly presented in accordance with GAAP. However, auditors also have a responsibility to ensure management has properly applied GAAP in the preparation of financial statements.

The Primary Responsibility for Properly Applying GAAP When Communicating with Investors