Why auditor is interested in management reports
The subject of management reports has been prominent the past few years. A management report is included in the annual report to shareholders. This report should not be confused with management's discussion and analysis of operations and financial condition that also is relatively new to the annual report.
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 information that will be useful to the readers.
1. Explain the general purposes of the management report.
2. Identify five subject areas or topics which have been recommended for inclusion in the management report.
3. Explain why the content of the management report influences the activities of the external auditor the audit engagement?