1. Explain the four sources of auditor liability - liability to clients under contract law, liability to third parties under common law, liability to third parties under federal securities laws, and criminal liability... 2. Chapter 3 discusses audit failure - what is audit failure? 3. Sarbanes-Oxley requires management to sign a statement included in their 10-K filings, accept responsibility for the financial statements, and certify that they are properly prepared. Why is management required to provide this statement with their 10-K filings? 4. What is the purpose of an audit of a company's financial statements? 5. Explain the following terms: 1) accounting cycle and transaction process, 2) balances, and 3) presentation and disclosure. 6. The auditor's primarily responsibility is to perform the audit in conformance with GAAS. Auditors meet their audit objectives with a properly planned and executed audit. Explain and discuss the steps in the audit process that are discussed in chapter 3 of your text materials in Course Resources