The automakers of California file a suit seeking to prevent the enforcement of a law by California legislature which seeks to curb the emissions of carbon dioxide substantially from all automobiles within their territory. The automakers contend that there is already a federal law in place which puts a cap on carbon dioxide emission indirectly by placing nationwide fuel economy standards. The manufacturers claim that natural justice is being denied to them by placing even harsher restrictions through Californian law. To Explain: Tracing of relevant California and federal law.

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Before issuing a report on the compilation of financial statements of a non-public entity, the accountant should: a. Apply analytical procedures to selected financial data to discover any material misstatements. b. Corroborate at least a sample of the assertions management has embodied in the financial statements. c. Inquire of the client's personnel whether the financial statements omit substantially all disclosures. d. Read the financial statements to consider whether the financial statements are free from obvious material errors.

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Chapter 1, Problem 4RE

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Case Summary: The automakers of California file a suit seeking to prevent the enforcement of a law by California legislature which seeks to curb the emissions of carbon dioxide substantially from all automobiles within their territory. The automakers contend that there is already a federal law in place which puts a cap on carbon dioxide emission indirectly by placing nationwide fuel economy standards. The manufacturers claim that natural justice is being denied to them by placing even harsher restrictions through Californian law.

To Explain: Tracing of relevant California and federal law.

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Before issuing a report on the compilation of financial statements of a non-public entity, the accountant should: a. Apply analytical procedures to selected financial data to discover any material misstatements. b. Corroborate at least a sample of the assertions management has embodied in the financial statements. c. Inquire of the client's personnel whether the financial statements omit substantially all disclosures. d. Read the financial statements to consider whether the financial statements are free from obvious material errors.

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