Reference no: EM131222631

Billy Bob Cruise, the owner of the Good Ole Boy Bar, asked Kidman, CPA, to perform an audit of his accounting records. Billy Bob told Kidman that an audit was required and needed to be completed in time to provide the audited financial statements to a local bank as part of a loan application package. Kidman immediately accepted the engagement and agreed to provide audited financial statements with an auditor’s report within four weeks time. Billy Bob agreed to pay Kidman a fixed audit fee plus a bonus if the loan was made by the bank. Kidman hired two accounting students to perform the audit and spent one day telling them exactly what to do. Kidman told the students not to perform any review of internal controls. Rather, he told them to focus their efforts on determining whether the balances shown in the general ledger were accurate based upon the amounts of the debits and credits posted to the accounts. After checking the accuracy of the postings, the students were to summarize the amounts shown in the ledger in the form of financial statements. The students did exactly as they were told, and after three weeks work provided the financial statements to Kidman, without any footnotes. Kidman reviewed the financial statements prepared and issued an unqualified opinion on them. However, the opinion made no reference to generally accepted accounting principles (GAAP) or to the consistency of application

REQUIRED: AssesswhetherKidman is in conformancewith generallyaccepted auditing standards (GAAS) in his performance of this audit. If Kidman violated any of the standards, indicate which standards have been violated and why they have been violated.