An Investor Is Considering Investing in One of Two Companies

question 56

Essay

An investor is considering investing in one of two companies.The companies have very similar reported financial position and results of operations.However,only one of the companies has its financial statements audited.
a.Describe what creates the demand for an audit in this situation.Include a discussion of how audited financial statements facilitate this investment transaction,and the effect of the audit on business risk and information risk.
b.Identify the potential consequences to the company of not having its financial statements audited.

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Definitions:

Bar-code Scanner

A device used to read and decode bar-codes, often utilized in retail, inventory management, and healthcare for tracking purposes.

Online Database

A digital collection of organized information or data, typically accessed via the internet, that can be searched and retrieved.

Pulse Oximetry

A non-invasive method to measure the oxygen saturation level of the blood, indicating how well oxygen is being sent to parts of the body furthest from the heart.

Acutely Short

Describes a situation or condition that has become significantly insufficient or lacking in a very short period of time.