Professional Documents
Culture Documents
Questions
3. Competencies include both what individual auditors know and what individual
auditors and audit teams do. Competencies are evidenced by auditors applying
their skills in the delivery of services to clients or supporting the delivery of
those services. These competencies categorized as “High Opportunity
Competencies” and “Low Opportunity Competencies” are as follows:
Technology
Verification
a) Alleged misstatements that the auditor did not detect in the financial
statements involving
1) improper or inadequate disclosure
2) inappropriate valuations
b) Alleged failure to detect defalcation as a result of negligence in the
conduct of the audit
c) Alleged failure to complete the audit on the agreed-on date
d) Alleged inappropriate withdrawal from an audit
9. Due (professional) care is the standard by which the courts and the profession
expect a CPA to practice. A CPA who is found to have exercised due
professional care in an engagement should not have any liability to others.
10. The four gradations are none, negligence, gross negligence (sometimes referred
to as constructive fraud), and fraud. At one extreme is the auditor who performs
an appropriate audit and issues an appropriate report. This auditor’s degree of
wrongdoing is “none.” An auditor who commits fraud is at the other extreme,
since he or she knows that the financial statements are misstated and yet issues
an unqualified opinion. An auditor is negligent if he or she does not do what a
reasonably prudent auditor should do in the circumstances. An auditor is grossly
negligent if he or she consistently fails to follow the standards of the profession
on an engagement.
11. Auditors are responsible to clients for negligence, gross negligence, or fraud.
14. An auditor should (a) follow the Philippine Standards on Auditing, the Code of
Ethics for Professional Accountants in the Philippines, and where appropriate,
PFRSs; (b) establish and follow appropriate quality control procedures; (c)
evaluate whether a client has the necessary integrity and appropriate reputation
in the community; (d) evaluate carefully why a client wants an audit; (e) conduct
the audit with appropriate professional skepticism; (f) provide for appropriate
levels of consultation for issues; and (g) provide for appropriate review of the
audit.
15. The prudent man concept states that a man is responsible for conducting a job in
good faith and with integrity, but is not infallible. Therefore, the auditor is
expected to conduct an audit using due care, but does not claim to be a guarantor
or insurer of financial statements.