audit report

1. Using the audit report included in Chapter 1, identify and briefly explain the phrases or words that indicate to the users that the financial statements are not necessarily an “exact” representation of the results of operations and financial position of a company.
2. You recently attended your five-year college reunion. At the main reception, you encountered an old friend, Lee Beagle, who recently graduated from law school and is now practicing with a large law firm in town. When you told him that you are a CPA and employed by a regional CPA firm, he made the following statement: “You know, if the securities acts had not been passed by Congress in the 1930s, no one would be interested in having an audit performed.”
Draft a memo that highlights your thoughts about Lee’s statement that audits only take place because they are required by law.