The financial statements of the Liber Company have never been audited by an independent CPA. Recently, Liber's management asked John Burns, CPA, to conduct a special study of Liber's internal accounting controls for the purpose of expressing an opinion on the system. The study will not include an examination of Liber's financial statements. Following completion of his special study, Burns plans to prepare a report that is consistent with the requirements of the engagement.

{Required:}

a. Describe the responsibility of management for internal control and the broad objectives, and inherent limitations of internal accounting control as set forth in a report on internal accounting control.

b. Explain and contrast the study of internal control that Burns might make as part of an examination of financial statements with his engagement to express an opinion as to (1) objectives of review or study, (2) scope of review or study, and (3) nature and content of reports. Organize your answer for \(b\) as follows:

c. Write the first and fourth paragraphs of the report based on a special study to express an opinion.

d. Indicate the major differences between the first and fourth paragraphs of a special study and a report based on a financial statement audit.

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Examination of Financial Statements 1. Objective 2. Scope 3. Report Special Study to Express Opinion 1. Objective 2. Scope 3. Report