You recently had lunch with a friend, Roger, whom you had not seen for a number of

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Question:

You recently had lunch with a friend, Roger, whom you had not seen for a number of months. During your conversation with Roger he pointed out that he is very busy these days at work dealing with their external auditors who are conducting an audit of his company's financial statements.

Roger tells you: "Our auditors will be providing some assurance as to whether the financial statements are prepared correctly in accordance with generally accepted auditing standards. I am so grateful for the auditors as we are hoping to get a bank loan and the bank will be relying on their opinion on the financial statements. If anything is wrong with the financial statements the auditors have assured me that they take full responsibility for the preparation of the financial statements including whether any fraud takes place in our company. The auditors will also meet with the Bank after they complete the audit to help us get our loan."

Required:

1) Identify five misconceptions that your friend seems to have about the auditor's role with respect to the audit of his company's financial statements. Provide a response on the next page for each misconception.