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Question: Auditor as Guarantor. Your neighbor Loot Starkin invited you to lunch yesterday. Sure enough, it was no "free lunch" because Loot wanted to discuss the annual report of Dodge Corporation. He owns Dodge stock and just received the annual report. Loot says, "Our auditors prepared the audited financial statements and gave an unqualified opinion, so my investment must be safe."

Required: What misconceptions does Loot Starkin seem to have about the auditor's role with respect to Dodge Corporation?

Accounting Basics, Accounting

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