Who is responsible for making the financial statements of a company the company itself or the external auditor? Is that what is actually being done in real life these days?

First, thanks for invitation.

Surely, in reality making the Financial Statements in Today differs from in the past .

In the past

 Companies often relied on accountants from their audit firms to assist in reconciling accounts, preparing the adjusting journal entries and writing financial statements. For instances, Small companies  often lacked the level of accounting sophistication necessary to carry out these tasks. So, relying on the audit firm often made sense from the perspective of efficiency and cost containment.

Today

 An increased focus on auditor independence has come about . Therefore, the outside  independent auditor is engaged to render an opinion on whether a company’s financial statements are presented fairly, in all material respects, in accordance with financial reporting framework. The audit provides users such as lenders and investors with an enhanced degree of confidence in the financial statements. An audit conducted in accordance with GAAS and relevant ethical requirements enables the auditor to form that opinion.

What The external auditor do

The outside auditor, to form the opinion, gathers appropriate and sufficient evidence and observes, tests, compares and confirms until gaining reasonable assurance. The auditor then forms an opinion of whether the financial statements are free of material misstatement, whether due to fraud or error. First and foremost, auditors do not take responsibility for the financial statements on which they form an opinion. The responsibility for financial statement presentation lies squarely in the hands of the company being audited.

But the external auditors are not a part of management, which means the auditor will not:

-Authorize, execute or consummate transactions on behalf of a client

- Prepare or make changes to source documents

-Assume custody of client assets, including maintenance of bank accounts

- Establish or maintain internal controls, including the performance of ongoing monitoring activities for a client

- Supervise client employees performing normal recurring activities

-Report to the board of directors on behalf of management

- Serve as a client’s stock or escrow agent or general counsel

-Sign payroll tax returns on behalf of a client

-Approve vendor invoices for payment

- Design a client’s financial management system or make modifications to source code underlying that system

-Hire or terminate employees

This list is not all-inclusive. But, in short, the auditor may not assume the role and duties of management.

In practical terms, there are a number of tasks you should not expect your auditor to perform.

- Analyze or reconcile accounts

- “Close the books”

- Locate invoices, etc., for testing

- Prepare confirmations for mailing

- Select accounting policies or procedures

-Prepare financial statements or footnote disclosures

- Determine estimates included in financial statements

- Determine restrictions of assets

- Establish value of assets and liabilities

- Maintain client permanent records, including loan documents, leases, contracts and other legal documents

- Prepare or maintain minutes of board of directors meetings

- Establish account coding or classifications

- Determine retirement plan contributions

- Implement corrective action plans

-Prepare an entity for audit

 

On sum, “The financial statements are the responsibility of management ” 

It appears prominently in an auditor’s communications, including the audit report. Management’s responsibility is the underlying foundation on which audits are conducted. Simply put, relying on outside auditors without management having responsibility for the financial statements, the demarcation line that determines the auditor’s independence and objectivity regarding the client and the audit engagement would not be as clear.

 

Adopted from: www.grfcpa.com/resources/publications/auditor-responsibilities

 

 

The company will be the main responsible for making their Financial Statements, provided by the company Accountant. In the instance they do not have Accountant, they could pay for accounting firms to help them in making the Financial Statements. External Auditors role in the Financial Statements is to perform audits, in accordance with specific laws or rules, with independence to the company being audited.

The Company itself is liable for financial statements 

Thanks for Invitation.

 

Management is responsible for the preparation, presentation and integrity of the financial statements and other financial information in this report. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles, and include estimates and judgments made by management that were necessary to prepare the statements in accordance with such accounting principles.

The Company maintains a system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded from loss and that transactions are executed and recorded in accordance with established procedures. The concept of reasonable assurance is based on the recognition that the cost of maintaining a system of internal accounting controls should not exceed related benefits. The system of internal accounting controls is supported by written policies and guidelines, internal auditing and the careful selection and training of qualified personnel.

The financial statements have been audited by the Company's independent auditors. Their audit was made in accordance with generally accepted auditing standards, as indicated in the Report of Independent Auditors, and included a review of the system of internal accounting controls and tests of transactions to the extent they considered necessary to carry out their responsibilities for the audit.

 

Management has considered the internal auditors' and the independent auditors' recommendations concerning the Company's system of internal control and has taken actions that we believe are cost-effective in the circumstances to respond appropriately to these recommendations. The Audit Committee of the Board of Directors meets periodically with the internal auditors and the independent auditors to discuss the Company's internal accounting controls, auditing and financial reporting matters. 

Thanks for the invite I agree with the answers relevant experts

Thanks for invitation

finance manager is responsible for financial statment

the company itself and general reviewed by the internal auditor and external auditor.

 

The responsibility of making the financial statements lies with the management of the company while external auditors can only express their opinion that whether the financial statements presents true and fair view of the financial position and the financial affairs of the company.

Thanks for inviting.

Preparation of financial statement is one of the duties of Finance Manager if he is available or it is an accountant duty as it is needed to be prepared internally. Based on the internally prepared financial statement, important decisions can be made.  

Further, External auditor also prepare a financial statement after auditing the necessary documents and will express their independent opinion on financial statement.

The finance manager is responsible for making financial statements. External auditors are making audited true and fair view of the financial statements preparation and presentation of the company real life of these days.

In my opinion financials are being prepared in the company by the coordination of Accounts & Finance department. While external auditors are reviewing monitoring and verifying financials. Company is responsible for financials, Now a days external auditors are just taking data and copy paste on their letter head and presenting to the management of the company.