Listed below in alphabetical order are the steps that are included in preparing, auditing, and distributing financial statements:

1. Analyze events and transactions.

2. Determine fairness of statements in conformity with GAAP.

3. Distribute audited financial statements and audit report to interested users.

4. Prepare audit report on findings.

5. Make financial statement assertions.

6. Jbtain and evaluate evidence on statement assertions.

7. Prepare financial statements in conformity with GAAP.

8. Record and summarize data in accounting records.

9. Obtain management's financial statements.

10. Deliver audit report to client.

Required:

a. Prepare a diagram of the relationship between (1) accounting and (2) auditing in the preparation and audit of financial statements. Show each of the steps in the proper sequence.

b. Management and the independent auditor share the responsibility for the assertions contained in financial statements. Evaluate and discuss the accuracy of this contention.