A.Who Has the Responsibility for the Financial Statements?

a.Who has the responsibility for the financial statements?

The Public Company Accounting Oversight Board (PCAOB) clearly states that the ultimate responsibility for the financial statement of a company rests on the management`s shoulder.

Management is responsible for implementingthorough accounting policies and creating internal control that reports the company`s results on operation and financial position (e.g. transactions, assets, liabilities, and equity inside the organization) within the direct knowledge and control of management.

b.What is the role of the accountant (auditor) as to the financial statements?

The core role of the accountant is to aid as independent assessor of a

company`s financial statements, issued by management to the stockholders

andcreditors. Also, accountant`s role is to consult with management if there

have been any financial misstatements, fraud, etc., through an audit.

Accountants are responsible that a company`s financial statements are

presented fairly and follow GAAP principles.There are many American

families invest their savings in company`s securities, as an investment, in the

broader scope, accountants protects these family`s interest by auditing

company`s financial statements.

c.Accountants (auditors) are often included as defendants in lawsuits that relate to the financial statements. Speculate as to why this is the case.

When people file lawsuits, they often believe they were wronged without knowing who specifically is at fault. Accountants are frequently named in lawsuits involving finance because there are various legal theories upon which they may be liable for a plaintiff's damage. For example, the accountant may have been negligent in his calculations, causing financial harm. The account may have also made willful misrepresentations, or be liable on theories of intentional fraud. A plaintiff will name the accountant so that he can depose him and conduct discovery to determine of the accountant is personally liable on any of these theories. Even though the accountant is frequently dismissed from this type of suit, he is named out of an abundance of caution.

d.Why did 3M include the report “ Management`s Report on Internal Controlover Financial Reporting”

3M`s `Management`s Report on Internal Control over Financial Reporting` ensure reasonable assurance regarding the reliability of financial reporting and the financial statements for investors and creditors in accordance with GAAP. 3M`s compliance with the Sarbanes-Oxley Act. It states that 3M maintained an effective internal control over financial reporting.

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