Month: May 2025

Shareholders often believe the external (or statutory) auditor’s opinion means that the financial statements of a company are ‘correct’.

If the published financial statements are subsequently found to be ‘incorrect’, perhaps due to a fraud, shareholders then blame the auditor, but responsibility for preventing and detecting fraud and error lie with?

Select ONE answer:

1. The directors of the company only
2. The directors and management of the company
3. The management of the company only
4. The company’s audit committee

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Both the directors and the management have responsibility as senior management to protect the company against fraud and irregularity.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Big Staffie plc is listed but is outside the FTSE 350.

This means that, according to the UK Corporate Governance Code, the minimum number of independent non-executive directors that
should sit on the company’s board is?

Select ONE answer:

1. One
2. Two
3. Three
4. Variable as it depends on the total number of people on the board

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > This is set out in provisions supporting main principle B1 (effectiveness: the composition of the board) of the Code.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

On which of the fundamental accounting principles are the directors of a company expected to report in the company’s annual financial statements?

Select ONE answer:

1. The going concern status of the company
2. The materiality of specific transactions
3. The accruals approach to accounting
4. The consistency of treatment of items or transactions

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > The directors must state that the financial statements are prepared on the going concern basis, if this is the case. They must also state whether there are any material uncertainties about the company’s ability to continue as a going concern for at least 12 months from the date of approval of the financial statements.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.