The following describes the correct answers to Exercises 1, 2, and 3. See Appendices A and B for the auditor’s reports with errors identified (via boldface font) and corrected. Those versions are helpful to display for revealing errors to the class.
Exercise 1: Discovery of Noncompliance Errors
[1] Incorrect: In conformity with Public Company Accounting Oversight Board (United States) (PCAOB) standards.
Correct: In conformity with accounting principles generally accepted in the United States of America (AS 3101.08[e]).
Discussion: This issue is related to identifying the applicable financial reporting framework. The PCAOB does not immediately seem out of place to students within an auditor’s report of a public company. This is a good reminder of the dual responsibility of auditors to be proficient in accounting and audit standards.
[2a] Incorrect: (Second paragraph) We have also audited, in accordance with the standards of the American Institute of CPAs (AICPA), (AS 3101.09[c])
[2b]...
