The paper “ Audit Independence Rules and Key to the Detection of the Fraud” is a dramatic example of a finance & accounting assignment. In the contemporary auditing debate centering on professional skepticism, presumptive doubt, and neutrality have gained prominence. With neutrality, auditors neither trust nor distrust client management, while presumptive doubt relates to auditors assuming some level of dishonesty by management unless evidence indicates otherwise. Professional skepticism represents a critical assessment of audit evidence/management assertions/supporting evidence through the adoption of a questioning approach. This arises out of the recognition that circumstances may exist in which the financial statements may manifest, material misstatements. 2) Examples of Will’ s Exercise of Professional SkepticismIn this case, Will’ s exercise of professional skepticism is evident.
Will demonstrates a questioning mind/mindset or being alert to situations that may indicate probable misstatement (fraud/error). First, Will decided to take the receipt to Jess to enquire about the disparity in cash payments that failed to manifest in that day’ s bank deposit. Professional skepticism played a vital role in aiding the auditor to realize that the entry in the receipt book was in black ink while the voucher was in blue ink, a glaring disparity, as they should have been completed in the same ink since they were completed at the same time.
Moreover, Will noted that the bills were sticky, which meant that they came straight from the bank to pay the ticket; indeed that was the case as the bills were “ Series 2006.” 3) Conditions Present in the case that could have limited Will’ s skepticismThe most prominent threat in Jess’ s case entails familiarity threat whereby there is along and close relationship that creates a sympathetic bond between Will and Jess.
Jessica Randle was the wife of his best friend Nacho, which presented a potential of conflict of interest, which could compromise Will’ s independence. Indeed, at first, Will viewed the explanation given by Jess that bank deposit had fallen in between two cabinets in the vault as a reasonable explanation. Initially, Will thought that it was unnecessary to pay attention to such a “ small item” owing to time pressures.
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