You recently had a conversation with Jack, a friend, whom you had not seen for a number of months because of Covid-19. During your discussion Jack told you that he had shares in a public company and had just reviewed the annual report that included the company's financial statements and the auditor's opinion. You asked Jack how the company is doing.  Jack said "Segals LLP, a global public accounting firm prepared the audited financial statements and gave an unqualified opinion, so my investment must be safe.  The company is doing well and I know I can rely on the as a clean opinion guarantees the accuracy.

I asked Jack if he was concerned whether fraud by either senior management or employees could be happening in the company.   Jack said "that since the auditors always test all of the controls at the public company, he is confident no one in upper management or will ever try and play any tricks with the numbers.  Besides the auditors look for fraud and I am sure the financial statements would reflect the impact of any fraud committed by management or employees"


Required:

Identify five misconceptions that your friend seems to have about the auditor's role with respect to the audit of the public company.

Provide a response on the next page for each misconception.