Sammy Jo, a CPA, performed the audit for the Rose Company, a company founded by her grandfather. Sammy Jos family no has any connection to the Rose Company. Sammy Jo had not worked on an audit for several years but was confident that she could perform satisfactorily. Jill communicated with the predecessor auditor and then prepared an engagement letter that was signed by a representative of Rose. The fee was somewhat high for this type of audit.

Rose provided a financial statement using the tax-basis of accounting. Under this method, transactions comply with Internal Revenue Code provisions and not necessarily with generally accepted accounting principles. The differences between the financial statements using tax-basis and GAAP are material. Rose did not provide any disclosure on this issue despite the fact that it was required and the difference rendered the financial statements incomparable to previous years financial statements.

Sammy Jo hired two college students to help her with the audit. Each of these students was assigned tasks consistent with her abilities. Sammy Jos review of the students work involved only seeing that the audit program had been followed. Sammy Jo had little time to answer her subordinates questions and just told them to review the professional standards and use their best judgment. After collecting most of the planned evidence, Sammy Jo decided that with the deadline looming that the audit is complete enough and she used the information they had to form an opinion.

Sammy Jo decided to issue a disclaimer of opinion because the unusual accounting method described above and the lack of disclosure about it precluded the issuance of an unqualified opinion. All necessary communications with the client were completed and the financial statements were released.

Required: List the 10 generally accepted auditing standards. Headings for the categories are provided. List the standards in their proper order within the categories. From the situation described above, list FOUR violations of the standards. It is possible that a particular standard may not be violated in the situation described.