Brief description of


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

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Accounting Basics: Brief description of
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