Ray the owner of a small company asked Holmes a CPA to conduct an audit of the company'srecords for the purpose of obtaining a loan. The audit was to be completed in two weeks and if theloan was obtained Holmes would receive a bonus.. Holmes accepted the engagement immediately.By accepting thiss engagement immediately Holmes was in vio;ation of which principle A. Performance B. Responsibilities C. Reporting D. None of the above

Ray the owner of a small company asked Holmes a CPA to conduct an audit of the company'srecords for the purpose of obtaining a loan. The audit was to be completed in two weeks and if theloan was obtained Holmes would receive a bonus.. Holmes accepted the engagement immediately.By accepting thiss engagement immediately Holmes was in vio;ation of which principle A. Performance B. Responsibilities C. Reporting D. None of the above

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter5: Professional Auditing Standards And The Audit Opinion Formulation Process

Section: Chapter Questions

Problem 51RSCQ: Ray, the owner of a small company, asked Holmes, CPA, to conduct an audit of the company’s records....

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The owner of a small company asked a CPA to conduct an audit of the company's records. The owner of the company told the CPA that the audit was to be completed in time to submit audited financial statements to a bank as part of a loan application. The CPA immediately accepted the engagement and agreed to provide an auditor's report within three weeks. The owner agreed to pay the CPA a fixed fee plus a bonus if the load was granted. The CPA hired two accounting students to conduct the audit and spent several hours telling them exactly what to do. The CPA told the students not to spend time reviewing the internal controls but instead to concentrate on proving the mathematical accuracy of the ledger accounts and summarizing the data in the accounting records that supported the company's financial statements. The students followed the CPA's instructions and after two weeks gave the CPA the financial statements which did not include any footnotes. The CPA reviewed the statements and…
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