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Unformatted text preview: itive characteristics and understate or remain silent about the negative characteristics of the property they have for sale. In other words, there is information
risk to the buyer. Seller Assertions, Information Asymmetry,
and Inspector Characteristics
To support the asking price, sellers typically make assertions about their property. For instance, the seller of an older home might declare that the roof is
watertight, that the foundation is sound, that there is no rot or pest damage,
and that the plumbing and electrical systems are in good working order. Fortunately, many sellers are honest and forthcoming, but this is not always the case. mes25435_ch01_001-032.indd 8 26/05/11 9:24 PM Conﬁrming Pages Chapter 1 An Introduction to Assurance and Financial Statement Auditing 9 The problem is that the buyer often does not know if she or he is dealing with
an honest seller or if the seller has the necessary expertise to evaluate all the
structural or mechanical aspects of the property. Lacking...
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This note was uploaded on 12/08/2012 for the course ACCT 564 at Washington University in St. Louis.