Reference no: EM132464804

(Management and auditor responsibilities) Footnotes are important in determining whether the financial statements are presented fairly in accordance with generally accepted accounting principles. Following are two sets of statements concerning footnotes.

1.Student A says that the primary responsibility for the adequacy of disclosure in the financial statements and footnotes rests with the auditor in charge of the audit field work. Student B says that the partner in charge of the engagement has the primary responsibility. Student C says that the staff person who drafts the statements and footnotes has the primary responsibility. Student D contends that it is the entity's responsibility.

Required

Question 1: Which statement is correct?

2. It is important to read the footnotes to financial statements, even though they often are presented in technical language and are incomprehensible. The auditor may reduce his exposure to third-party liability by stating something in the footnotes that contradicts completely what he has presented in the balance sheet or income statement

Required

Evaluate the above statement and indicate:

Question 1: a. Areas of agreement with the statement, if any.

Question 1: b. Areas of misconception, incompleteness, or fallacious reasoning included in the statements, if any. AICPA (adapted)