Question

The division of responsibility between the reporting company's management and the audit firm is described in which one of the following?

a. Scope paragraph.
b. Introductory paragraph.
c. Notes to the financial statements.
d. Opinion paragraph.

Answer 1

The division of responsibility between the reporting company's management and the audit firm is outlined in the introductory paragraph of the auditor's report.

Step-by-step explanation:

The division of responsibility between the reporting company's management and the audit firm is described in the introductory paragraph of the auditor's report. This paragraph typically outlines the scope of the audit and states that the management is responsible for the preparation and fair presentation of the financial statements, while the auditors are responsible for expressing an opinion on these statements based on the audit. The introductory paragraph sets the stage for the audit report by clearly delineating the roles and responsibilities of both parties.