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Question 1
Suppose you have been appointed asan auditor of Ehsan Private Limited Company, in which there are four shareholders, who are also the directors. In view ofpoor operational results, efforts are being made to reduce the expenses. In this respect, youare also requested to reduce the audit fee. To compensate this reduction, you are told that itis not necessary for you to do such a full audit as in the past, because the directors keep aclose watch on all business transactions.
Required:
a. Give your view on this offer and state your position as an auditor and whether you should adopt the suggestion of the director?
b. Will your view be the same if the client is a soleproprietorship instead of a private limited company? Discuss.
Question 2
Suppose you are a newly inducted trainee student in the audit firm.You think that auditor should conduct an audit with a detective approach and should lookonly for frauds. Your senior tells you that audit has to be conducted with an approach ofprofessional skepticism. How do you perform your duty with professional skepticism?
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