The Southwestern Rent-All Company has a number of franchised operations throughout the southwestern United States. The parent company owns some stores, but 80 percent are franchised. The franchisees agree to meet rigid company standards. If franchisees do not meet these standards, they have one year to bring their operation up to the franchised standards or they forfeit their franchise.

All of the rental products must be purchased from the Southwestern Rent-All Company. The franchise agreement requires that the franchisee:

• Maintain all products in workable condition before renting to customers.

• Maintain all products at regularly scheduled intervals.

• Achieve a customer satisfaction rating of 4.0 or higher on a 5.0 scale.

• Maintain the store so that it is considered safe, clean, and friendly.

Required:

a. Do each of the items identified above contain sufficient assertions that the auditor could provide an assurance service related to the item? Explain.

b. Identify the appropriate assertions, and develop an audit program to test each of the assertions.

c. Explain why management would want to engage an audit firm or to use internal auditors to address the assertions identified above.