Answer the following questions:

1. Explain part by part the technical definition of auditing.

2. Why is an audit of financial statements conducted?

3. What is auditing? How does it differ from accounting?

4. What is auditing? How does it differ from accounting?

5. Why can an audit not obtain absolute assurance?

6. Why is materiality is considered in an audit? How about audit risk?

7. GGC is a small, privately held corporation that has two stores. The Garcia family owns 100 percent of the company's stock, and family members manage the operations. Sales at the company's stores have been growing rapidly, and there appears to be a market for the company's sales conceptproviding bulk garden equipment and supplies at low prices. The controller prepares the company's financial statements, which are not audited. The company has no debt but is considers expanding. Such expansion may require long-term borrowings and is likely to reduce the family's day-to-day involvement in all of the company's operations. The family does not intend to sell stock in the company.

Discuss the factors that may make an audit necessary and potentially valuable for the company.