Auditor responsibilities to detect errors

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1. The audit report on General Motors for 2008 issued by Deloitte & Touche included the following statement: "The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern." Are you surprised to learn of this going-concern alert at a company such as General Motors? What signs might the auditors look for prior to issuing their report on the 2009 financial statements that help them reevaluate the going-concern assessment?

2. Do you think the concept of materiality is incompatible with ethical behavior? Why or why not?

3. Distinguish between an auditor's responsibilities to detect errors, illegal acts, and fraud. What role does materiality have in determining the proper reporting and disclosure of such events?

Reference no: EM13764981

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