Reference no: EM132539922

Question 1: Professional Skepticism. An important principle for auditors is the need to maintain an appropriate level of professional skepticism.

Required:
a. Define professional skepticism.
b. During which stages of the audit are auditors required to exhibit professional skepticism?
c. How does each of the following independent issues potentially relate to the principle of professional skepticism?

1. The auditor's firm has served the client for a long period of time, and strong friendships, have developed between the firm personnel and client's officers.

2. Auditors are anxious to complete the audit shortly because of other workload demands and deadlines related to other engagements.

3. The client has mentioned on a number of occasions its desire to reduce (or limit) the audit fee.

Question 2: Internet Exercise: Public Company Accounting Oversight Board Inspection Reports. Refer to the website of the Public Company Accounting Oversight Board (PCAOB) review the information under "Inspections, and select the most current inspection report for one of the Big Four firms (Deloitte, EY, KPMG, and PwC).

Required:
a. What information is contained in the "public" version of the PCAOB's inspection reports? Is there any additional information that you would like to see?

b. What categories of practices, policies, and procedures are evaluated in the PCAOB's inspection of the firm's quality control system?

c. For the firm you selected, how many practice offices had audits inspected by the PCAOB?

d. For the firm you selected, for how many audits (issuers) did the PCAOB find deficiencies?

e. Identify five deficiencies that were cited in the PCAOB's inspection report. For each deficiency. to which of the elements of the principles does it most closely relate? (If the firm had fewer than five deficiencies, evaluate all of the deficiencies identified in the report.)
1'. Briefly summarize the firm's response (if any) to the PCAOB's inspection report.