Do you agree or disagree with the following statements? Explain your rationale.
a. A primary purpose of an audit is to ensure that all fraud that might be significant to a user is detected and reported.
b. There is a not an independence problem in a privately-held firm when the auditor is to be engaged by the manager because the manager is also the owner.
c. Sarbanes-Oxley requires mandatory reporting on internal control for public companies. That requirement should be extended to major charities like the Red Cross.
d. The expectations of the auditors of public companies are too high; the expectations simply cannot be met; the public should be better educated on what the auditor does and is capable of doing.
e. The PCAOB greatly enhances the reputation of the public accounting profession because it not only sets standards, it determines whether firms audit according to those standards. g. Fairly presented in accordance to GAAP is not as precise of a criterion as one thinks because GAAP allows a wide variety of choices, e.g., FIFO vs. LIFO, accelerated vs. straight-line depreciation.
f. The auditor should be forced to state both (a) whether the financial statements are prepared in accordance with GAAP and (b) whether he or she feels that the choices made by the client best portray the economic substance of transactions within the GAAP framework.
g. Tax consulting, including preparing the tax return for top management does not create a conflict of interest with the conduct of the audit.