Auditor as Guarantor. Your neighbor, Loot Starkin, invited you to lunch yesterday. Sureenough, it was no “free lunch” because Loot wanted to discuss the annual report of DodgeCorporation. He owns Dodge stock and just received the annual report. Loot says, “Ourauditors prepared the audited financial statements and gave an unqualified opinion, so myinvestment must be safe.”Required:What misconceptions does Loot Starkin seem to have about the auditor’s role with respectto Dodge Corporation

Question

Auditor as Guarantor. Your neighbor, Loot Starkin, invited you to lunch yesterday. Sure
enough, it was no “free lunch” because Loot wanted to discuss the annual report of Dodge
Corporation. He owns Dodge stock and just received the annual report. Loot says, “Our
auditors prepared the audited financial statements and gave an unqualified opinion, so my
investment must be safe.”
Required:
What misconceptions does Loot Starkin seem to have about the auditor’s role with respect
to Dodge Corporation

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