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Briefly describe each of the principles underlying AICPA auditing standards




Case 2-21 (Objective 2-6) Ray, the owner of a small company, asked Holmes, a CPA, to conduct;an audit of the company?s records. Ray told Holmes that an audit was to be completed;in time to submit audited financial statements to a bank as part of a loan application.;Holmes immediately accepted the engagement and agreed to provide an auditor?s report;within 3 weeks. Ray agreed to pay Holmes a fixed fee plus a bonus if the loan was granted.;Holmes hired two accounting students to conduct the audit and spent several hours;telling them exactly what to do. Holmes told the students not to spend time reviewing;internal controls but instead to concentrate on proving the mathematical accuracy of;the ledger accounts and summarizing the data in the accounting records that support;Ray?s financial statements. The students followed Holmes?s instructions and after 2;weeks gave Holmes the financial statements, which did not include footnotes. Holmes;reviewed the statements and prepared an unqualified auditor?s report. The report did not;refer to generally accepted accounting principles or to the consistent application of such;principles.;Required: Briefly describe each of the principles underlying AICPA auditing standards and indicate;how the action(s) of Holmes resulted in a failure to comply with each principle.;Organize your answer as follows:*;*** Brief Description of Principle;***Holmes? Actions Resulting in Failure to Comply with the Principle


Paper#23894 | Written in 18-Jul-2015

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