Consumers Union is a nonprofit organization that provides information and counsel on consumer goods and services. A majo

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Consumers Union is a nonprofit organization that provides
information and counsel on consumer goods and services. A major
part of its function is the testing of different brands of consumer
products that are purchased on the open market and then the
reporting of the results of the tests in Consumer Reports​, a
monthly publication. Examples of the types of products it tests
are​ mid-sized automobiles, residential​ dehumidifiers,
flat-screen​ TVs, and blue jeans.
Compare the three ways users of financial statements can reduce
information risk with those available to a buyer of an
automobile.
Select the ways to reduce information risk for a buyer of an
automobile and the application to the buyer.
Ways to reduce information risk
Application to the buyer of an automobile:
User verifies information
User shares information risk with management
Accounting staff should certify the accounting data
(Options for Application of buyer of an automobile)
a.
That can be obtained by analyzing the manufacturer audited
financial statements.
b.
The manufacturer of a product has a responsibility to meet its
warranties and to provide a reasonable product. The buyer of an
automobile can return the automobile for correction of defects. In
some cases a refund may be obtained.
c.
That can be obtained by driving different​ automobiles,
examining the specifications of the​ automobiles, talking to
other users and doing research in various magazines.
d.
That can be obtained by obtaining financing at a low interest
rate.
e.
That can be obtained by reviewing the manufacturer certification
on the application of GAAP.
f.
This is similar to an audit in the sense that independent
information is provided by an independent party. The information
provided by Consumer Reports is comparable to that provided by a
CPA firm that audited financial statements.