Answer to Question 1
It is important that managers, investors, and potential investors be able to trust the numbers. To improve the accuracy of a firm's accounting information and its financial statements, businesses rely on audits conducted by accountants employed by public accounting firms. The purpose of an audit is to make sure that a firm's financial statements have been prepared in accordance with generally accepted accounting principles (GAAPs). While an audit report does not guarantee that a company has not cooked the books, it does imply that, on the whole, the company has followed generally accepted accounting principles (GAAPs).
Answer to Question 2
False