Now instead of earthwears auditor imagine you are a

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Unformatted text preview: bstantiate the truthfulness of each important assertion. For example, to ensure the cash exists, you might call the bank, examine bank statements, or send a letter to the bank requesting confirmation of the balance. To ensure the cash hasn’t been pledged or restricted, you might review the minutes of key management meetings to look for discussions on this issue. Once you have finished auditing the important assertions relating to the accounts contained in the company’s financial statements, you will need to report your findings to the company’s shareholders and to the investing public because EarthWear is publicly traded. Now, instead of EarthWear’s auditor, imagine you are a prospective investor in EarthWear. As an investor, would the reputation of the company’s auditor matter to you? Would you want to know that the audit firm used a well-recognized audit approach to gather sufficient, appropriate evidence? What form of report would you expect? What if the lead partner on the audit were related to EarthWear’s...
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