Management Responsibilities and Auditors Responsibilities
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See attached for the Report of Management.
a. What are the purposes of the two reports and who was responsible for writing each?
b. What information does the report of management provide to users of financial statements
c. Explain the purpose of the audit committee as described in the fourth paragraph of management's report. What is the relevance of the phrase "which has only outside directors"?
d. Is the audit report a standard wording unqualified, qualified - except for, or something else? Explain your answer
e. How long after the balance sheet date did the CPA firm complete the audit field work?
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REPORT OF MANAGEMENT
The management of American Express Company (the company) is responsible for the preparation and fair presentation of its Consolidated Financial Statements, which have been prepared in conformity with accounting principles generally accepted in the United States, and include amounts based on the best judgment of management. The company's management is also responsible for the accuracy and consistency of other financial information included in this annual report.
In recognition of its responsibility for the integrity and objectivity of data in the financial statements, the company maintains a system of internal control over financial reporting which is designed to provide reasonable, but not absolute, assurance with respect to the reliability of the company's financial statements. The concept of reasonable assurance is based on the notion that the cost of the internal control system should not exceed the benefits derived.
The internal control system is founded on an ethical climate and includes: (i) an organizational structure with clearly defined lines of responsibility, policies and procedures; (ii) a Code of Conduct; and (iii) the careful selection and training of employees. Internal auditors monitor and assess the effectiveness of the internal control system and report their findings to management and the Board of Directors throughout the year. The company's independent auditors are engaged ...
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