Question

Topic: Management Reports

Management reports have been a prominent topic the past few years. The term “Management Reports” can be understood in a variety of different contexts and applications. A management report is also included in the annual report to shareholders. An annual report to shareholders is not the same as annual financial statements, although financial information is included in an annual report to shareholders.

The management report is included in the annual report to shareholders as a result of the urging of a number of groups and organizations. Consequently, the form and content of the annual report to shareholders continues to evolve as management attempts to present additional decision useful information to various constituencies and stakeholders of the company.

1. Explain the general purposes of the management report included in the annual report to shareholders.

2. Identify five subject areas or topics that have been recommended for inclusion in the management report.

3. Explain why the content of the management report might influence the activities of the external auditor during an audit engagement.

Answer 1

Answer:

1.)

Management annual reports are formal financial statements which are published annually and sent to company stockholders aand many other interested parties. These reports assess the financial year's operations and discuss the organizations view of the upcoming year and the organizations place features. Both the profit and non-profit organizations generate annual reports.
The General purpose of the Annual Report:

1. General audited statements of the income financially stability, liquid cash flow and relevant notes on the statements which are providing details for different items.
2. Management's discussion and analysis (MD&A) of the organizations financial and economic condition which includes the results that the company has shared over the last couple of year.
3. Short detail of the company business in the on-going financial year.
4. Holding information which is related to the organizations different business zones.
5. Marking the company directors and top executives, if a director the main business of the organization that employs a male or female.
6. Situation on the subject areas that have been recommended for inclusion in the management.

2.)
The Subject areas that have been recommended for inclusion in the management report:

• Fully audited statements
• Management's discussion and analysis on financial condition
• Company stock and market share including the share holders
• Balance sheet status
• Board of director's information

3.)
Since the management report carries a lot of service information about the financial state of the company, its balance sheet shares and dividends and also about the board of directors on the list. An external auditor may not have exact idea of what the company's holding is and he/she might consider the company doesn't hold enough wealth to support thee cause and prove the listings they hold within the market. After seeing all the content he may be able to understand the seriousness of the audit he needs to perform and also after overlooking the financial data, he may plan to audit the respective functions along with the priority listing based on the analysis.