ZZZZ Best Review: Limited assurance that the financial statements have been prepared in conformity with GAAP. A “clean” review report provides negative.

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ZZZZ Best Review: Limited assurance that the financial statements have been prepared in conformity with GAAP. A “clean” review report provides negative assurance, that is, that the auditor did not discover any evidence suggesting material misstatements. Evidential Matter: Existence Audit evidence must be both relevant and valid. Enhancing validity: 1) evidence obtained from third party (but confederates of Minkow); 2) client has satisfactory internal control; 3) Auditor acquires evidence directly rather than indirectly

Documents prepared external to the client’s internal control system by an independent third party are generally considered to provide a high-quality of audit evidence. However, externally prepared documents in the possession of the client provide a lower quality of evidence than documents that originate and remain outside a client’s internal control system (restoration contracts were externally prepared but in the possession of ZZZZ Best). Other mgt assertions: Right and obligations Should have checked the construction permits of the sites or corresponded with the owners of the buildings to determine whether the client had a legal contract to provide the restoration services.

3. Payments received: Client can create what appears to be a normal operating cycle on paper  maintain a skeptical attitude. 4. Predecessor–successor communication: Receive all relevant information to make a client acceptance decision and design an appropriate audit (successor initiated): Integrity of management Disagreement with mgt re accounting principles or audit procedures Communications with clients audit committee The predecessors understanding as to reasons for the change in auditors

5. Confidentiality agreement  Information leaks to competitors Did restrict the audit  Scope limitation: If the auditor decides that a client’s confidentiality concerns results in scope limitation, the auditor should inform client management that he/she will be required to issue a disclaimer or qualified opinion. Client management can then decide whether to modify the constraints. 6. Is customary that client executives consult auditors before pre-audit earnings release so that the net income is considered “firm” by both parties.