Auditing a Company Jerry Stillwell, the owner of a small company, asked Jones, a CPA, to conduct an audit of the company’s financial statements. Stillwell told Jones that the audit needed to be completed in time to submit audited financial statements to a bank as part of a loan application.

Jones immediately accepted the assignment and agreed to provide an auditor’s report within two weeks.

Because Jones was busy, he hired two accounting students to perform the audit. After two hours of instruction, he sent them off to conduct the audit. Jones told the students not to spend time reviewing the internal controls, but instead to concentrate on proving the mathematical accuracy of the ledgers and other financial records.

The students followed Jones’s instructions, and after 10 days, they provided the financial statements, which did not include notes. Jones reviewed the statements and prepared an auditor’s report. The report did not refer to generally accepted accounting principles and contained no mention of any qualifications or disclosures. Briefly describe the problems with this audit.