1. Discuss the purpose of Financial Statements.

The purpose of general purpose financial statements is to provide informational

out the financial position, financial performance, and cash flows of an entity that is
useful to a wide range of users in making and evaluating decisions a about the
allocation of resources. Specifically, the objectives of general purpose financial reporting
in the public sector are a) to provide information useful for decision making, and b) to
demonstrate the accountability of the entity for the resources entrusted to it.

General purpose financial statements can also have a predictive or prospective

role, providing information useful in predicting the level of resources required for
continues operations, the resources that may be generated by continues operations,
and the associated risks and uncertainties.

2. Who is/are responsible for the preparation of financial Statements?

The responsibility for the preparation of the FSs rests with the head of the
entity/department central office COf/ or regional office (RO) or operating unit (OU) or
his/her authorized representative jointly with the head of the finance/accounting
division/unit for individual entity/department FSs and for department/entity FSs as a
single entity, the responsibility for the preparation of the FSs rests with the head of the
entity/department of jointly with the head of the finance unit.

3. Define what a Statement of Management Responsibility is.

Statement of Management Responsibility serve as the covering letter in
transmitting the agency’s financial statements to the COA, DBM, other oversight
agencies sand other parties.

4. Enumerate and explain briefly the qualitative characteristics of Financial

Statements.