Response to the following :
Required: Identify whether each of the following sentences would be found in (a) the auditor's report; (b) the statement of management's responsibility for the financial statements; or (c) the notes to the financial statements.
The answer to the first sentence is provided.
1. Calculation of current taxes is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
2. The financial statements were prepared by management in accordance with accounting principles generally accepted in Canada, applied on a consistent basis, and conform in all material respects with International Accounting Standards.
3. The financial statements for the year ended December 31, 2018 were approved and authorized for issue by the board of directors on April 17, 2019.
4. Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
5. Borrowing costs directly attributable to the acquisition, construction, or production of property, plant, and equipment are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported as interest expense.
6. The audit committee of the board, which is comprised solely of directors who are not employees of the company, is appointed by the board of directors annually.
7. Details of the company's property, plant, and equipment and their carrying amounts at December 31 are as follows:
8. I conducted [. . .] in accordance with Canadian generally accepted [. . .]. Those [. . .] require that I comply with ethical requirements, and plan and perform the [. . .] to obtain reasonable assurance about whether the financial statements are free from material misstatement.
9. Share capital represents the nominal value of shares that have been issued.
10. In my opinion, the financial statements present fairly, in all material respects, the financial position of Acme Supplies Ltd. as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.
11. The shareholder loan is due on demand, non-interest bearing, and unsecured.
12. An [. . .] also includes evaluation of the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statement.
13. The financial statements have been prepared using the significant accounting policies and measurement bases summarized below.
14. Management is responsible for the integrity and objectivity of the financial statements, and to produce reliable accounting records for the preparation of financial information.
15. Acme Supplies Ltd. is a limited liability company incorporated and domiciled in Canada.
16. Depreciation is recognized on a straight-line basis to write down the cost, net of estimated residual value.
17. The independent shareholders' [. . .] has unrestricted access to the audit committee. The audit committee also makes recommendations to the board with respect to the appointment and remuneration of the company's auditor.
18. Current income tax liabilities comprise those obligations to fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date.
19. The audit committee of the board meets regularly with financial management of the company and with the shareholders' independent auditor to discuss internal controls, audit matters, including audit scope and auditor remuneration, and financial reporting issues.
20. Operating expenses are recognized in the income statement upon utilization of the service or at the date of their origin.
21. All shares are eligible to receive dividends, have their capital repaid, and represent one vote at the annual shareholders' meeting.