Question 1: (25 marks)

Hussain, the sole owner of a small hardware business, has been told that the business should have its financial statements audited by an independent CPA. Hussain, having some bookkeeping experience, has personally prepared the companys financial statements and does not understand why such statements should be audited by a CPA. Hussain discussed the matter with Ahmed, a CPA, and asked Ahmed to explain why an audit is considered important.

Required:

1. Describe the objectives of an independent audit refer to above case. (10 marks)
2. Identify five ways in which an independent audit may be beneficial to Hussain. (10 marks)