Question

In each of the following, determine if the conversation between two newly hired staff auditors is appropriate or inappropriate. Also, identify which of the elements of the fundamental principles their conversation supports, if appropriate, or violates, if inappropriate. "Of course, I'm qualified to be assigned to this engagement. I have an accounting degree from a top a. university and was an honors graduate. I know some of the accounting rules have changed since ! graduated, but be able to figure that out as we go through the audit." "It doesn't really matter what others think...I'm completely independent of Acme Industries and should b. be a member of the audit team. While I own some stock, it's a small amount and I'm holding it for the long term, anyway." "You really have to question everything the client tells you. That's what professional skepticism is all about. It's a shame you can't believe a word they say." "The evidence is lower in quality, but we typically use internal evidence when we audit property, plant, and equipment. just takes too much time and costs too much to get more reliable evidence." "On that last job, we really planned the audit well. We were able to finish everything by November 1 and didn't need to do any work after year-end." "We're not too worried about internal control. We always do the same substantive procedures anyway. so why take the time to look at the client's controls ?" "Because the client isn't accounting for its leases property, we need to issue other a qualified opinion or a disclaimer or opinion. Just how large a dollar impact does this have on the financial statements?" "When we evaluate items for materiality, the only thing we need to worry about is the absolute dollar amount. There really isn't anything else we need to consider

Answer 1

a. "Of course, I'm qualified to be assigned to this engagement. I have an accounting degree from a top university and was an honors graduate. I know some of the accounting rules Inappropriate Competence and Capabilities have changed since I graduated, but I'll be able to figure that| out as we go through the audit." "It doesn't really matter what others think...I'm completely independent of Acme Industries and should be a member of the audit team. While I own some stock, it's a small amount Inappropriate Independence and Due Care and I'm holding it for the long term, anyway." c. Professional Skepticism and Professional Judgement d. Audit Evidence Planning and Supervision "You really have to question everything the client tells you. That's what professional skepticism is all about. It's a shame Inappropriate you can't believe a word they say." "The evidence is lower in quality, but we typically use internal evidence when we audit property, plant, and Inappropriate equipment. It just takes too much time and costs too much to get more reliable evidence." "On that last job, we really planned the audit well. We were able to finish everything by November 1 and didn't need to inappropriate do any work after year-end." "We're not too worried about internal control. We always do the same substantive procedures anyway, so why take the inappropriate time to look at the client's controls?" "Because the client isn't accounting for its leases properly, we need to issue either a qualified opinion or a disclaimer Inappropriate of opinion. Just how large a dollar impact does this have on the financial statements?" "When we evaluate items for materiality, the only thing we need to worry about is the absolute dollar amount. There inappropriate really isn't anything else we need to consider." f. Risk Assessment Reporting h. Materiality