Audit Responsibilities

In: Business and Management

Submitted By ubreggin
Words 313
Pages 2
Ryan Mullin
Auditing- ACC 304
Assignment 2.63

Auditors are expected to adhere by certain responsibilities, performance and reporting standards. In the case study 2.63 the evidence provided shows that these principles were violated when conducting the audit.
Auditors are responsible to be competent and capable in order to perform the audit. It was unsuitable for Holmes to hire two accounting students to perform the audit since they lacked the proper experience in the accounting field needed to be competent and capable. In this case, the two students must have been supervised in order for the audit to be considered an unqualified opinion.
“Professional skepticism and professional judgment are necessary responsibilities of an auditor through out the entire course of the audit.” Pg 45 Auditing and Assurance Services 5th Edition.
Since Holmes just accepted financial statements without questioning any of the evidence, he did not provide professional skepticism and professional judgment. They simply just checked the numbers to see if the entire math was correct. They did not ask the question: Where are these numbers coming from?
Auditors must also adhere to specific ethical requirements. Since the two accounting students were offered a bonus if the bank were to approve the loan, both students did not satisfy the independence requirement. Thus their opinion was not without bias and therefore was not unqualified. Furthermore, since the students were not experienced Holmes failed to provide due care.
As far as performance of the audit Holmes failed to supervise the two students, he did not review the internal controls. He also failed to define the materiality levels of the project to the accounting students. The report that was supposedly unqualified was invalid because the way in which the audit was performed and because it consisted of responsibility/ethical and…...

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