What guarantee is there that an annual report is a true picture of a company’s performance and not just propaganda put out by directors?
All annual reports have to include a report from the auditors, who are independent accountants charged with investigating a company’s financial affairs to ensure that the published figures give a true and fair view of performance. Their investigation cannot extend to examining every single transaction (impossible in a company of any size), so they use statistical sampling and other risk-based testing procedures to assess the quality of the company’s systems as a basis for producing the annual report. They are not infallible, but they stand between the stockholders and the directors as a way of trying to ensure probity in the running of a company.
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