In order to complete the CMA qualification requirement in ICMAB, I performed a research on the topic “Measuring awareness of management responsibilities over financial reporting”. Purpose of the research was to understand what are the responsibilities of management over financial reporting; how these reporting responsibilities are arising; whether management are aware of their responsibilities over financial reporting, whether they are actually performing their responsibilities and whether the misstatements in financial statements are due to lack of management awareness over financial reporting or due to management intention.
In the report i explained what are the financial reporting and how management are made responsible for it. Also I identified some key responsibilities over financial reporting rising from financial reporting framework and legal framework. I illustrated that IFRSs being financial reporting requires management to recognize, measure and disclose financial transactions under various reporting standards. I also explained how different laws and regulations requires management to perform certain responsibilities over financial reporting.
I performed a survey on 15 management representatives of 15 companies from diverse business sectors. Although it was planned to survey on 50 business executives but due to shortage of time and difficulties to connect with them led to lowering the sample size. Purpose of the survey was to understand whether managements are aware of their responsibilities and whether they are performing the responsibilities if they are aware of them. In addition, I also wanted to understand how professional education and training helps in understanding and performing of the responsibilities. I hypothesized that 1) management are not aware of all of their responsibilities over financial reporting and 2) even if they are aware, they are not performing their responsibilities.
After analyzing the response from respondents, I found out that managements are try their best to perform their responsibilities over financial reporting complying with requirements arising from reporting and legal framework. However, due to lack of continuous education and training, management are not updated about the changes in the reporting responsibilities. So my first hypothesis “Management are not aware of all of the reporting responsibilities over financial reporting” was correct. From my research I found out that performance of reporting responsibilities are highly correlated with management intention. So even if management is aware of their responsibilities, some of them are not intentionally performing those responsibilities. This support my second hypothesis “Management are not performing their responsibilities” In addition to these hypothesizes, the research also identified several other findings and concluded with recommendation for critical issues.
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Research on measuring awareness of management responsibilities over financial reporting