Task: You have been asked to prepare a brief presentation on the nature and purpose of the auditors' opinion for your investment club. The club members would like your presentation to answer these questions:
Q1. How is the "scope" of an audit determined? What role should the auditors' fee play in setting the scope?
Q2. How can the auditors examine the financial statements and related records of a company without reconstructing every financial transaction of the period under examination?
Q3. In the auditors' opinion the auditors state whether the financial statements are presented "fairly." What, if anything, does this opinion of "fairness" have to do with accuracy of the statements?
Q4. If a company uses an accounting principle that is inconsistent with an FASB pronouncement, what must auditors disclose?
Q5. What are the general reasons for issuing a qualified opinion?
How would you answer these questions?