Final answer:
The audit process is crucial for providing an objective review of a company's financial statements, ensuring their accuracy and reliability for shareholders and other stakeholders. It represents a key component of corporate governance. An audit failure, as seen in Lehman Brothers, can have significant consequences.
Step-by-step explanation:
The main purpose of the audit process conducted by a CPA firm, such as in the year 9 audit for Bauer Corp, is to provide an independent and objective assessment of the company's financial statements and accounting practices. The audit is intended to ensure that the financial records are fair and accurate, giving confidence to shareholders, creditors, and other stakeholders in the financial health and transparency of the company’s operations. In auditing Bauer Corp, the CPA firm will examine various financial records and transactions to certify their accuracy and adherence to the generally accepted accounting principles (GAAP).
Generally, an audit serves several key purposes. It acts as a form of corporate governance, with the board of directors, representing shareholder interests, overseeing top executives' management of the company. The audit itself is performed by an independent firm to confirm the financial information's reliability. Furthermore, external entities such as investors and large shareholders rely on the audited financial statements to make informed decisions. The failure in Lehman Brothers' case illustrates the importance of rigorous auditing practices and accurate financial reporting for corporate governance.