What Is a Management's Responsibility Statement?

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Upon producing an official financial report, the management of a organization often produces a statement of responsibility. A few characteristics can clue you in to whether a written letter in a report is just a letter or the official statement of responsibility.

Basics

The Management's Statement of Responsibility regularly appears as a written letter at the beginning of a financial statement. This statement is usually an annual report. The letter declares that all financial statements within the report are accurate.

Signers

The statement is signed by the top executive and other higher management people in the organization. For example, at a college or university, the Vice President of Finance will sign the report. In a corporation, the President or CEO will sign the report, along with a treasurer and possibly the chair of the Board of Directors.

 

Verification

The statement will also usually claim that an independent auditor has verified the written statements. This provides an added layer of objectivity. While management is still responsible for the financial statements in the report, management shows that it has taken all the appropriate steps to ensure accuracy by hiring an independent auditor.