Score: 35.90/40 Points 89.

75 %

Select the best answer for each of the following items.

1. Award: 0 out of 1.29 points

a. Which of the following best describes the relationship between assurance services and attest services.

! While attest services involve nancial data, assurance services involve nonnancial data.

! While attest services require objectivity, assurance services do not require objectivity.

"! Both attest and assurance services require independence.

#$ Attest and assurance services are different terms referring to the same types of services.

All attest services are assurance services, but not all assurance services are attest servicesthis makes
attest services a subset of assurance services. Answer (1) is incorrect because both attest and assurance
services may both involve nancial or nonnancial data. Answer (2) is incorrect because objectivity (and
independence) is required for all of these services. Answer (4) is incorrect because attest and assurance
services are not different terms for referring to the same types of servicesattest is a broader concept.

References

Multiple Choice Learning Objective: 01-01 Learning Objective: 01-02 Identify assurance
Describe the nature of services that involve attestation.
assurance services.
2. Award: 1.29 out of 1.29 points

b . Which of the following has primary responsibility for the fairness of the representations made in nancial
statements.

$ Clients management.

! Independent auditor.

! Audit committee.

! AICPA.

The client's management is primarily responsible for representations contained in the nancial statements.
The independent auditors are responsible for performing their audit in accordance with generally accepted
auditing standards.

References

Multiple Choice Learning Objective: 01-

03 Describe the nature
of nancial statement
audits.
3. Award: 1.29 out of 1.29 points

c . The most important benet of having an annual audit by a public accounting rm is to.

$ Provide assurance to investors and other outsiders that the nancial statements are reliable.

! Enable ocers and directors to avoid personal responsibility for any misstatements in the nancial
statements.

! Meet the requirements of government agencies.

! Provide assurance that illegal acts, if any exist, will be brought to light.

The most important benet of having an annual audit by a public accounting rm is to provide assurance to
investors and other outsiders that the nancial statements are dependable. The expansion of the securities
markets has tremendously increased the need for verication of nancial statements performed by
competent, independent persons. Answer (2) is incorrect because management cannot avoid responsibility
for the nancial statements by retaining independent auditors. Answer (3) gives no recognition to the fact
that many nonpublic corporations and other business entities have no obligation to le audited nancial
statements with governmental agencies. It also disregards the fact that large corporations which secure
capital from the general public would continue to provide audited statements even though there were no
such requirements by governmental agencies. Answer (4) is unacceptable because it implies that an audit is
designed to detect illegal acts without regard to type or size.

References

Multiple Choice Learning Objective: 01-

03 Describe the nature
of nancial statement
audits.
4. Award: 1.29 out of 1.29 points

d. The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board (PCAOB). Which of the
following is not one of the responsibilities of that board?

! Establish independence standards for auditors of public companies.

$ Review nancial reports led with the SEC.

! Establish auditing standards for audits of public companies.

! Sanction registered audit rms.

The PCAOB ordinarily does not review nancial reports led with the Securities and Exchange Commission
although, if they so desire, they may review such reports to accomplish their other responsibilities. The other
three replies are all explicit responsibilities of the PCAOB.

References

Multiple Choice Learning Objective: 01-

07 Explain the regulatory
process for auditors of
public companies and
auditors of nonpublic
companies.

5. Award: 1.29 out of 1.29 points

e . Which of these organizations has the responsibility to perform inspections of auditors of public
companies.

! American Institute of Certied Public Accountants.

! Securities and Exchange Commission.

! Financial Accounting Standards Board.

$ Public Company Accounting Oversight Board.

The Public Company Accounting Oversight Board was given the authority by the Sarbanes-Oxley Act of
2002 to establish or adopt auditing standards for audits of public companies.

References

Multiple Choice Learning Objective: 01-

07 Explain the regulatory
process for auditors of
public companies and
auditors of nonpublic
companies.
6. Award: 1.29 out of 1.29 points

f. Governmental auditing, in addition to including audits of nancial statements, often includes audits of
eciency, effectiveness, and:

! Adequacy.

! Evaluation

! Accuracy.

$ Compliance.

Governmental auditing often extends to audits of eciency, effectiveness, and compliance (with laws,
regulations, etc). The other responses, adequacy, evaluation, and accuracy, are terms not typically used to
summarize the scope of governmental auditing.

References

Multiple Choice Learning Objective: 01-

06 Contrast the various
types of audits and types
of auditors.

7. Award: 1.29 out of 1.29 points

g . In general, internal auditors independence will be greatest when they report directly to the.

! Financial vice president.

! Corporate controller.

$ Audit committee of the board of directors.

! Chief executive ocer.

Normally, the higher in an organization an internal auditor reports, the greater the degree of independence.
Accordingly, reporting to the audit committee of the board of directors increases the likelihood that the
internal auditor will be able to act independently of those being audited. Answers (1) and (2) may lead to a
lesser degree of independence because when an internal auditor reports to the nancial vice-president or
the controller they cannot objectively review their work. Answer (4) is incorrect because it is generally not
practical or effective for the internal auditor to report to stockholders on a timely basis.

References

Multiple Choice Learning Objective: 01-

06 Contrast the various
types of audits and types
of auditors.
8. Award: 1.29 out of 1.29 points

h . Which of the following did not precipitate the passage of the Sarbanes-Oxley Act of 2002 to regulate
public accounting rms.

! Disclosures related to accounting irregularities at Enron and WorldCom.

! Restatements of nancial statements by a number of public companies.

! Conviction of the accounting rm of Arthur Andersen LLP.

$ Ethical scandals at the AICPA.

Ethical scandals at the AICPA was not one of the causes of the passage of the Sarbanes-Oxley Act of 2002.
All of the other responses contributed to passage of the Act.

References

Multiple Choice Learning Objective: 01-

05 Describe how the
credibility of the
accounting profession
was affected by the large
number of companies
reporting accounting
irregularities in the
beginning of this century.

9. Award: 0 out of 1.29 points

i . Which of the following organizations establishes accounting standards for U.S. government agencies.

#$ The Financial Accounting Standards Board.

! The Governmental Accounting Standards Board.

"! The Federal Accounting Standards Advisory Board.

! The Public Company Accounting Oversight Board.

The Federal Accounting Standards Advisory Board establishes accounting standards for United States
governmental agencies. The Governmental Accounting Standards Board establishes accounting standards
for state and local government entities.

References

Multiple Choice Learning Objective: 01-

06 Contrast the various
types of audits and types
of auditors.
10. Award: 1.29 out of 1.29 points

j. Which of the following is correct about forensic audits.

! All audit engagements are forensic in nature.

! Forensic audits are performed by law rms; they are not performed by CPA rms.

! Forensic audits are equivalent to compliance audits.

$ Forensic audits are usually performed in situations in which fraud has been found or is suspected.

Forensic audits are usually performed when fraud has been found or is suspected. Answer (1) is incorrect
because it overstates the nature of most audits by suggesting that all audits are forensic in nature. Answer
(2) is wrong in that CPA rms (or law rms) may perform forensic audits. Answer (3) is incorrect because while
compliance audits may nd fraud, they are not directed at fraud as are forensic audits.

References

Multiple Choice Learning Objective: 01-

06 Contrast the various
types of audits and types
of auditors.

11. Award: 1.29 out of 1.29 points

k . What best describes the purpose of the auditors consideration of internal control in a nancial statement
audit for a nonpublic company.

$ To determine the nature, timing, and extent of audit testing.

! To make recommendations to the client regarding improvements in internal control.

! To train new auditors on accounting and control systems.

! To identify opportunities for fraud within the clients operations.

Because the auditors purposes for considering internal control are to (a) plan the audit and (b) to determine
the nature, timing, and extent of the tests to be performed, answer (1) is correct.

References

Multiple Choice Learning Objective: 01-

03 Describe the nature
of nancial statement
audits.
12. Award: 1.29 out of 1.29 points

l. Which of the following is an example of a compliance audit.

! An audit of nancial statements.

$ An audit of a companys policies and procedures for adhering to environmental laws and regulations.

! An audit of a companys internal control over nancial reporting.

! An audit of the eciency and effectiveness of a companys legal department.

A compliance audit measures the compliance of an organization with established criteria such as laws and
regulations. Answer (2) is correct because it addresses policies and procedures on environmental laws and
regulations.

References

Multiple Choice Learning Objective: 01-

06 Contrast the various
types of audits and types
of auditors.

13. Award: 1.29 out of 1.29 points

Which of the following is a type of attest engagement?

! Internal audit services.

! Tax advisory services.

$ Agreed-upon procedures.

! Consulting services.

References

Multiple Choice Learning Objective: 01-

02 Identify assurance
services that involve
attestation.
14. Award: 1.29 out of 1.29 points

An effect of the Sarbanes-Oxley Act of 2002 was to:

! require periodic peer reviews of large CPA rms performed by the General Accounting Oce.

$ reduce the accounting professions level of self regulation.

! reduce the circumstances in which one may le securities with the SEC.

! eliminate SEC involvement with sales of securities.

References

Multiple Choice Learning Objective: 01-

05 Describe how the
credibility of the
accounting profession
was affected by the large
number of companies
reporting accounting
irregularities in the
beginning of this century.

15. Award: 1.29 out of 1.29 points

To improve the quality of nancial statements led with it, the SEC has adopted.

$ Regulation S-X.

! Industry Audit and Accounting Guides.

! Accounting Research Bulletins.

! Statements on Financial Accounting Standards.

References

Multiple Choice Learning Objective: 01-

07 Explain the regulatory
process for auditors of
public companies and
auditors of nonpublic
companies.

16. Award: 0.52 out of 1.29 points

Select the term from the dropdowns provided which is closely related to the auditing term, phrase, or
organizational name.

Auditing term, phrase, or organizational name Term

Generally accepted auditing
a. SASs
standards
b. Internal Revenue Service Providing credibility
c. Internal auditor Protection of investors
d. Attest function Operational audits
Essential element for the attest
e. Audited financial statements
function
f. Quality control Peer review
g. SEC Dependable financial information
h. Accounting services by CPA Compilation of financial statements
Guide to scope of substantive
i. Consideration of internal control
procedures
j. Independence Dependable financial information

References

Worksheet Learning Objective: 01- Learning Objective: 01-07 Explain the regulatory
03 Describe the nature process for auditors of public companies and
of fi nancial statement auditors of nonpublic companies.
audits.

Learning Learning Objective: 01-

Objective: 01-01 04 Explain why audits
Describe the are demanded by
nature of society.
assurance
services.

Learning Learning Objective: 01-

Objective: 01-02 06 Contrast the various
Identify assurance types of audits and
services that types of auditors.
involve
attestation.

Select the term from the dropdowns provided which is closely related to the auditing term, phrase, or
organizational name.

Auditing term, phrase, or organizational name Term

a. SASs Generally accepted auditing standards
b. Internal Revenue Service Compliance audits
c. Internal auditor Operational audits
d. Attest function Providing credibility
e. Audited financial statements Dependable financial information
f. Quality control Peer review
g. SEC Protection of investors
h. Accounting services by CPA Compilation of financial statements
i. Consideration of internal control Guide to scope of substantive procedures
j. Independence Essential element for the attest function
17. Award: 1.29 out of 1.29 points

a. Which of the following organizations can revoke the right of an individual to practice as a CPA?

! The Public Company Accounting Oversight Board.

! The American Institute of Certied Public Accountants.

! The Securities and Exchange Commission.

$ The applicable state board of accountancy.

Because the license to practice as a CPA is granted by the state, the applicable state, through its state board
of accountancy, has the right to revoke the right of an individual to practice as a CPA. Students are
sometimes confused by the fact that while the CPA examination is administered nationally, it is the individual
states that award CPA certicates.

References

Multiple Choice Learning Objective: 02-

01 Describe the authority
of the two types of
auditing standards in
effect in the United
StatesAICPA generally
accepted auditing
standards and PCAOB
standards.
18. Award: 1.29 out of 1.29 points

b. The AICPA over time has played an important role in standards setting. Which of the following standards
are currently established by the AICPA?

! Accounting standards applicable to nonpublic companies.

$ Auditing standards applicable to audits of nonpublic companies.

! Quality control standards applicable to audits of public companies.

! Standards for reviews of the interim nancial information issued by public companies.

The AICPA has authority to establish auditing standard for nonpublic companies. The Financial Accounting
Standards board has authority for accounting standards of both public and nonpublic companies. The Public
Company Accounting Oversight Board has authority to establish quality control standards and standards for
interim reviews of public companies.

References

Multiple Choice Learning Objective: 02-

02 Identify the nature
and underlying principles
of generally accepted
auditing standards.

19. Award: 1.29 out of 1.29 points

c. Which of the following does the FASB consider a source of nonauthoritative guidance for use when there
is no authoritative guidance available?

! The FASB Codication.

$ FASB Concepts Statements.

! SEC Rules.

! SEC Interpretive Releases.

FASB Concepts Statements are considered nonauthoritative guidance. The other options all represent
authoritative guidance.

References

Multiple Choice Learning Objective: 02-

02 Identify the nature
and underlying principles
of generally accepted
auditing standards.
20. Award: 1.29 out of 1.29 points

d. Financial statement audits performed under PCAOB requirements are designed to provide which type(s)
of assurance with respect to the detection of material misstatements due to errors or fraud?
Reasonable Absolute

! Yes Yes

$ Yes No

! No Yes

! No No

Financial statement audits provide reasonable, not absolute assurance.

References

Multiple Choice Learning Objective: 02-

01 Describe the authority
of the two types of
auditing standards in
effect in the United
StatesAICPA generally
accepted auditing
standards and PCAOB
standards.
21. Award: 1.29 out of 1.29 points

e. A basic objective of a CPA rm is to provide professional services that conform with professional
standards. Reasonable assurance of achieving this basic objective is provided through:

! Compliance with generally accepted reporting standards.

$ A system of quality control.

! A system of peer review.

! Continuing professional education.

The quality control standards were established to provide reasonable assurance that professional services
conrm with professional standards. Answer (1) is incomplete since many standards in addition to reporting
standards must be followed. Answer (3) is incorrect because a peer review monitors whether a rm's quality
control standards are being met. Answer (4) is incorrect because continuing professional education is only
one part of a system of quality control.

References

Multiple Choice Learning Objective: 02-

07 Describe the quality
control standards and
their purposes.

22. Award: 1.29 out of 1.29 points

f. Which of the following is not explicitly included in a standard report for a nonpublic company?

! The CPAs opinion that the nancial statements comply with generally accepted accounting principles.

! That generally accepted auditing standards were followed during the audit.

$ That internal control of the client was satisfactory.

! An identication of the nancial statements audited.

The effectiveness of the internal control of the client is not explicitly mentioned in the unqualied standard
report although it is implicit in the reference to generally accepted auditing standards. Answers (1), (2), and (4)
are all explicitly set forth in the unqualied standard form of audit report.

References

Multiple Choice Learning Objective: 02-

04 Explain the key
elements of the auditors
standard report.
23. Award: 1.29 out of 1.29 points

g. The general group of the 10 PCAOB Auditing Standards requires that:

$ The auditors maintain an independent mental attitude.

! The audit be conducted in conformity with generally accepted accounting principles.

! Assistants, if any, be properly supervised.

! The auditors obtain an understanding of internal control.

An independent mental attitude on the part of the auditor is required by the second general standard of the
PCAOB. Answers (3) and (4) relate to the standards of eld work. Answer (2) confuses generally accepted
accounting principles with generally accepted auditing standards.

References

Multiple Choice Learning Objective: 02-

01 Describe the authority
of the two types of
auditing standards in
effect in the United
StatesAICPA generally
accepted auditing
standards and PCAOB
standards.

24. Award: 1.29 out of 1.29 points

h. Which AICPA quality control standard would most likely be satised when a CPA rm maintains records
indicating which partners or employees of the rm were previously employed by the CPA rms clients?

! Professional relationship.

! Engagement performance.

$ Relevant ethical requirements.

! Monitoring.

Such a quality control policy is designed to assure that personnel assigned to an engagement are
independent to perform the work, an ethical requirement.

References

Multiple Choice Learning Objective: 02-

07 Describe the quality
control standards and
their purposes.
25. Award: 1.29 out of 1.29 points

i. An audit provides reasonable assurance of detecting material misstatement due to:

Fraudulent Financial Misappropriation
Reporting of Assets

$ Yes Yes

! Yes No

! No Yes

! No No

An audit provides reasonable assurance of detecting misstatements due to fraud, which includes two types
of intentional misstatements of nancial statementsmisstatements arising from fraudulent nancial
reporting and misstatements arising from misappropriation of assets.

References

Multiple Choice Learning Objective: 02-

03 Discuss the auditors
responsibility for
detecting errors, fraud,
and noncompliance with
laws and regulations.

26. Award: 1.29 out of 1.29 points

j. Which of the following is not included in an integrated audit report on the nancial statements of a public
company?

$ The report states that the audit was performed in accordance with AICPA standards.

! The report indicates that the nancial statements are the responsibility of management.

! The report indicates that the auditors have also audited the effectiveness of the company's internal control.

! The report is signed in the name of the CPA rm.

An integrated audit report on the nancial statements of a public company states that the audit was
performed in accordance with Public Company Accounting Oversight Board standards, not AICPA standards.

References

Multiple Choice Learning Objective: 02-

04 Explain the key
elements of the auditors
standard report.
27. Award: 1.29 out of 1.29 points

k. Audit rms that are subject to inspections by the PCAOB staff include:

! All audit rms.

! Audit rms that are registered with the SEC.

$ Audit rms that are registered with the PCAOB.

! Audit rms that are registered with a state board of accountancy.

The PCAOB staff performs inspections of audit rms that are registered with the PCAOB. In order to perform
an audit of a public client an audit rm must be registered.

References

Multiple Choice Learning Objective: 02-

01 Describe the authority
of the two types of
auditing standards in
effect in the United
StatesAICPA generally
accepted auditing
standards and PCAOB
standards.
28. Award: 1.29 out of 1.29 points

l. Which of the following is not a difference noted when comparing the AICPA audit report to the
international audit report?

! The international audit report may use the phrase true and fair view.

! The international audit report may be signed using the personal name of the audit partner, the audit rm, or
both.

! The international audit report requires inclusion of the city of the CPA rm oce that performed the audit.

$ The international audit report does not include an opinion on internal control.

Neither the AICPA audit report nor the international audit report include an opinion on internal control. The
other options provide actual differences between the two reports.

References

Multiple Choice Learning Objective: 02-

08 Explain the status of
international accounting
and auditing standards
and the content of the
international audit report.
29. Award: 1.29 out of 1.29 points

Match each the following statements with the appropriate type of auditors' report (each auditors' report may
be used once, more than once, or not at all):

Statement Type of Audit Report

a. The auditors are unable to determine the overall fairness of the
financial statements. Disclaimer
b. This is the report most clients prefer. Standard unmodified
c. A limitation on the scope of the audit is significant, but not so as
to overshadow an overall opinion. Qualified
d. The financial statements are not fairly presented. Adverse
e. A material departure from GAAP exists, but not so material as to
overshadow an overall opinion. Qualified

References

Worksheet Learning Objective: 02-

05 Discuss the other
types of reports that are
issued by auditors.

Match each the following statements with the appropriate type of auditors' report (each auditors' report may
be used once, more than once, or not at all):

Statement Type of Audit Report

a. The auditors are unable to determine the overall fairness of the
financial statements. Disclaimer
b. This is the report most clients prefer. Standard unmodified
c. A limitation on the scope of the audit is significant, but not so as
to overshadow an overall opinion. Qualified
d. The financial statements are not fairly presented. Adverse
e. A material departure from GAAP exists, but not so material as to
overshadow an overall opinion. Qualified

30. Award: 0.97 out of 1.29 points

For each term in the first column select the partial (or complete) definition or illustration. Each partial (or
complete) definition or illustration may be used only once:

Term Partial (or Complete) Definition or Illustration

A CPA firm that may conduct only audits of public
1. A report providing a summary of findings
companies
2. A report providing reasonable assurance Audit report
3. An error An unintentional misstatement
4. Financial reporting framework Generally accepted accounting principles
5. Fraud Misappropriation of assets
6. Inspection A review of a CPA firm conducted by PCAOB
7. Quality control elements Independence and reasonable assurance
A CPA firm that may conduct audits of public or non-public
8. Registered public accounting firm
companies
 Rev. 2_1_2012

References

Worksheet Learning Objective: 02- Learning Objective: 02-04 Explain the key
02 Identify the nature elements of the auditors standard report.
and underlying
principles of generally
accepted auditing
standards.

Learning Learning Objective: 02-

Objective: 02-01 03 Discuss the auditors
Describe the responsibility for
authority of the detecting errors, fraud,
two types of and noncompliance with
auditing laws and regulations.
standards in
effect in the
United
StatesAICPA
generally
accepted auditing
standards and
PCAOB
standards.

For each term in the first column select the partial (or complete) definition or illustration. Each partial (or
complete) definition or illustration may be used only once:

Term Partial (or Complete) Definition or Illustration

1. A report providing a summary of findings Agreed-upon procedures report
2. A report providing reasonable assurance Audit report
3. An error An unintentional misstatement
4. Financial reporting framework Generally accepted accounting principles
5. Fraud Misappropriation of assets
6. Inspection A review of a CPA firm conducted by PCAOB
7. Quality control elements Human resources and monitoring
8. Registered public accounting firm A CPA firm that may conduct audits of public or non-public companies
Rev. 2_1_2012

31. Award: 0.87 out of 1.30 points

Joe Rezzo, a college student majoring in accounting, helped finance his education with a part-time job
maintaining all accounting records for a small business, White Company, located near the campus. Upon
graduation, Rezzo passed the CPA examination and joined the audit staff of a national CPA firm. However,
he continued to perform all accounting work for White Company during his leisure time. Two years later,
Rezzo received his CPA certificate and decided to give up his part-time work with White Company. He
notified White that he would no longer be available after preparing the year-end financial statements.
On January 7, Rezzo delivered the annual financial statements as his final act for White Company. The
owner then made the following request: Joe, I am applying for a substantial bank loan, and the bank loan
officer insists upon getting audited financial statements to support my loan application. You are now a CPA,
and you know everything thats happened in this company and everything thats included in these financial
statements, and you know they give a fair picture. I would appreciate it if you would write out the standard
audit report and attach it to the financial statements. Then Ill be able to get some fast action on my loan
application.

Required:
a. Would Rezzo be justified in complying with Whites request for an auditors opinion?
No

b. If you think Rezzo should issue the audit report, do you think he should first perform an audit of the
company despite his detailed knowledge of the companys affairs?
No

c. If White had requested an audit by the national CPA firm for which Rezzo worked, would it have been
reasonable for that firm to accept and to assign Rezzo to perform the audit?
No

References

Worksheet Learning Objective: 02-

02 Identify the nature
and underlying
principles of generally
accepted auditing
standards.

Learning Learning Objective: 02-

Objective: 02-01 03 Discuss the auditors
Describe the responsibility for
authority of the detecting errors, fraud,
two types of and noncompliance with
auditing laws and regulations.
standards in
effect in the
United
StatesAICPA
generally
accepted auditing
standards and
PCAOB
standards.

Joe Rezzo, a college student majoring in accounting, helped finance his education with a part-time job
maintaining all accounting records for a small business, White Company, located near the campus. Upon
graduation, Rezzo passed the CPA examination and joined the audit staff of a national CPA firm. However,
he continued to perform all accounting work for White Company during his leisure time. Two years later,
Rezzo received his CPA certificate and decided to give up his part-time work with White Company. He
notified White that he would no longer be available after preparing the year-end financial statements.
On January 7, Rezzo delivered the annual financial statements as his final act for White Company. The
owner then made the following request: Joe, I am applying for a substantial bank loan, and the bank loan
officer insists upon getting audited financial statements to support my loan application. You are now a CPA,
and you know everything thats happened in this company and everything thats included in these financial
statements, and you know they give a fair picture. I would appreciate it if you would write out the standard
audit report and attach it to the financial statements. Then Ill be able to get some fast action on my loan
application.

Required:
a. Would Rezzo be justified in complying with Whites request for an auditors opinion?
No

b. If you think Rezzo should issue the audit report, do you think he should first perform an audit of the
company despite his detailed knowledge of the companys affairs?
 Yes

c. If White had requested an audit by the national CPA firm for which Rezzo worked, would it have been
reasonable for that firm to accept and to assign Rezzo to perform the audit?
No

Explanation:

a. No, Rezzo would not be justified in complying with White's request. Although Rezzo is a CPA, he has
not audited the financial statements of White Company in accordance with generally accepted auditing
standards. Preparation of financial statements cannot be construed as synonymous with auditing the
statements. Furthermore, because of Rezzo's deep involvement with White Company, it is questionable
whether he could maintain an independence of mental attitude if he did audit the financial statements.
b. If Rezzo were justified in issuing a standard audit report on the financial statements of White Company,
he should not do so until he has completed an audit of the financial statements. The auditor does not
express an opinion on financial statements without first performing an audit.
c. No, it would not be reasonable for the public accounting firm employing Rezzo to assign him to the audit
of White Company financial statements. Having himself prepared the financial statements, although,
Rezzo would be in the position of attempting to independently evaluate the products of his own work,
independence of mental attitude in the appraisal of one's own work is extremely doubtful.