1. Explain the rules for accounting for impairment of loans under Statement of Financial Accounting Standards (FAS) No. 114, Accounting by Creditors for Impairment of a Loan. Did FCB apply these rules properly?
2. Evaluate the audit work of Howard & Stacey with respect to PCAOB audit standards discussed in the text and any other standards you choose to review. In particular comment on the auditors risk assessment in the audit of First Community Bank.
3. Evaluate the actions of the auditors using the AICPA ethics rules discussed in chapter 4 and the GAAS discussed in this chapter.