Brad Jackson was assigned to the audit of a client that had not been audited by any public accounting firm in the preceding year. In conducting the audit, he did no testing of the beginning balance of accounts receivable, inventory, or accounts payable on the grounds that the auditor's report was being limited to the ending balance sheet, the income statement, and the cash flow. No comparative financial state¬ ments are to be issued.

Required

a. Explain the error in Jackson's reasoning.

b. Suggest an approach Jackson can follow in verifying the beginning balance in accounts receivable.

c. Why does the same problem not exist in the verification of beginning balances on continuing audit engagements?