Management reports have been a prominent topic the past few years. The term Ac€A?Management ReportsAc€?? 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.