Describe each of the generally accepted auditing standards

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Reference no: EM13122589

Shalimar is the owner of a small café in the downtown area. She has decided to expand her business so she applied for a loan from a local bank. The bank has requested that the financial statements of the business be audited by a CPA. Shalimar asked Jones, a CPA, to conduct and audit of the company records and assure him that if everything goes well with the loan approval she will and a bonus to his fixed fee. Jones immediately accepted the engagement and agreed to provide an auditor's report within two weeks.

Jones hired two accounting students to conduct the audit. He spent several hours telling the students exactly what to do during their audit work. He also mention to the students not to spend a lot of time reviewing the company's 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 Shalimar's financial statements. The students followed Jones instructions and after 10 days provide Jones the financial statements without any footnotes. Jones reviewed the statements and prepared an unqualified auditor's report. The report did not refer to generally accepted accounting principles or to the year-to-year application of such principles.

Briefly describe each of the generally accepted auditing standards and indicate how the action(s) of Jones resulted in a failure to comply with each standard. Use the table below to present your answers.

Reference no: EM13122589

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