Part 1 Introduction to Assurance and Financial Statement Auditing Required: Briefly describe the four categories of Principles Underlying an Audit Conducted in Accordance with Generally Accepted Auditing Standards and indicate in what ways the action(s) of Jones violate(s) each of the four categories of principles. (AICPA, adapted) -25 Imani Boucher, the owner of a small electronics firm, asked Sally Jones, CPA, to conduct an audit of the company's records. Boucher 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 accepted the engagement and agreed to provide an auditor's report within one month. Jones asked Boucher to pay her normal audit fee plus a small percentage of the loan if it was granted. Jones hired two accounting students to conduct the audit and spent a couple of hours telling them what to do. She told the new hires not to spend time obtaining an understanding of the entity's system of internal control but to concentrate on proving the mathematical accuracy of the general and subsidiary ledgers and summarizing the data in the accounting records in order to create financial statements that Boucher could use to submit to the bank. The new hires followed Jones's instructions and after two weeks gave Jones the financial statements they had pulled together, excluding footnotes. Jones reviewed the statements and prepared an unqualified auditor's report. The report did not refer to generally accepted accounting principles, and no audit procedures were conducted to verify the year-to-year application of such principles. Jones told Boucher there was no need for Boucher to review the financial statements because Jones was confident the students had done a pretty good job of pulling the data together. Jones also asked Boucher if she would consider loaning her some money, as she was short that month