In addition to shareholders, many different parties are interested in the audited accounts of a company. Name FOUR such parties and state the significance of audited accounts to each one of them

Auditing and Assurance Revision Questions and Answers

Users of financial statements

i) Tax authorities: Audited accounts give a true picture of the entity‘s profits and can be relied upon tax authorities for the assessment of tax on the company.

ii) Lenders:- audited accounts are credible and therefore can be relied upon to assess the credit worthiness of the entity.

iii) Employees – Are interested in whether the entity is a going concern, which can be established from the audited accounts to ensure job security.

iv) Customers – those who rely on entity‘s products are interested on whether the entity will be producing in future (going concern) or whether they ought to look for alternative suppliers

v) Potential/actual investors need to know whether investing in the company is worthwhile i.e are they bound to benefit financially in terms of dividends and capital gains.



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