Discussion 1
1a. Compare the primary auditor objectives in auditing historical financial statements to auditing significant in reducing the risk of reporting errors or misstatements in financial statements. Provide a rationale for your response.
1b. Create a scenario where it would be acceptable for an external auditor to accept an audit engagement without having knowledge of a client's business environment. Ascertain the key legal ramifications and risk mitigation strategies associated with an auditor performing the audit. Support your position.
Discussion 2
2a. From the e-Activity, discuss the departures from generally accepted accounting principles (GAAP) that you have researched, and give your opinion as to whether or not the Public Company Accounting Oversight Board (PCAOB) should levy sanctions against the CPA firm for issuing the unqualified report. Identify the sanctions and section of the report the company should have modified to address departures from GAAP. Support your position.
2b. Compare the code of professional conduct for CPAs to the code of professional conduct for accountants who are non-CPAs. Determine the major ethical issues created by the mergers of public accounting firms with non-CPA firms that perform accounting services. Explain your rationale.
Discussion 3
3a. From the e-Activity, analyze whether or not investors who were misled by relying on financial statements could hold the audit firm liable for audit failure either by common or securities laws. Provide a rationale for your response.
3b. According to an article in the CPA Journal, the accounting profession has long contended that an audit conducted in accordance with generally accepted auditing standards (GAAS) provides reasonable assurance that there are no material misstatements contained within financial statements. Suggest at least two (2) alternative methods that auditors can use to provide a more concrete level of assurance to investors. Provide support for your responses with examples of such methods in use.