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Monday, October 4, 2010

Management vs. Those Charged with Governance

SA 260


‘Those charged with governance’ means the person(s) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity. This includes overseeing the financial reporting and disclosure process. In some cases, those charged with governance are responsible for approving the financial statements (in other cases management has this responsibility).

AAS 27

‘Those charged with governance’ means the person(s) responsible for the supervision, control and direction of an entity who are accountable for ensuring that the entity achieves its objectives, with regard to reliability of financial reporting, effectiveness and efficiency of operations, compliance with applicable laws, and reporting to interested parties. Those charged with governance include management only when it performs such functions.

The new definition concentrates on oversight and eliminates references to ‘control’ and ‘ensuring that the entity achieves its objectives’

SA 260

‘Management’ means the person(s) who have executive responsibility for the conduct of the entity’s operations. In some entities, management includes some or all of those charged with governance, e.g., executive directors, or owner-managers. Management is responsible for preparing the financial statements, overseen by those charged with governance, and in some cases management is also responsible for approving the financial statements (in other cases those charged with governance have this responsibility

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