Question

Loretta Feidler is managing the audit of a major manufacturing company. During the audit, Loretta fails to exercise professional skepticism. This is likely a violation of which of the following general standards?

1) Due professional care
2) Planning and supervision
3) Sufficient relevant data
4) Professional competence

Answer 1

Loretta Feidler's lack of professional skepticism in an audit most likely violates the general standard of due professional care, which demands critical assessment and alertness to contradictions in audit evidence.

Step-by-step explanation:

If Loretta Feidler is managing the audit of a major manufacturing company and fails to exercise professional skepticism, this is likely a violation of the general standard of due professional care. Professional skepticism is an essential component of due professional care, which requires auditors to critically assess audit evidence and remain alert to evidence that contradicts or brings into question the reliability of documents and responses to inquiries. Lack of professional skepticism can lead to overlooking irregularities, accepting evidence without proper questioning, and potentially failing to identify material misstatements in the financial statements.

Therefore, the failure to exercise professional skepticism does not align with the expectations outlined in professional auditing standards and can severely impact the quality of an audit. Loretta's action mostly aligns with a violation of due professional care, although insufficient skepticism can also affect planning and supervision, the sufficiency, and relevance of data, and potentially indicate a lack of professional competence.