Auditing & Assurance Services (Auditing and Assurance Services)
Auditing & Assurance Services (Auditing and Assurance Services)
7th Edition
ISBN: 9781259573286
Author: Timothy J Louwers, Allen Blay, David Sinason Associate Professor, Jerry R Strawser, Jay C. Thibodeau Associate Professor
Publisher: McGraw-Hill Education
Question
Book Icon
Chapter C2, Problem 1DQ
To determine

Explain whether the audit reports should be used to solicit investments, or sales, and explain the ways a CPA (certified public accountant) could prevent Person JB’s behavior.

Expert Solution & Answer
Check Mark

Explanation of Solution

The main purpose of audit reports is to provide reasonable assurance to the investor that the company’s financial data is reliable. As per the authoritative pronouncements, there is no restriction to use audit reports unless the information is not found misleading. In the given case, JB has used the audit reports as a general marketing tool to solicit investments, or credits, or sales. This practice could be acceptable as long as the information is real.

The CPA does not use the audit reports to create chaos or fears among the investors and customers. But CPA could ward off the impending damages by holding talks with the clients and make them understand the purpose of audit reports; or conveyed restrictions through the engagement letter.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education