Case 3.1

A Day in the Life of Brent Dorsey

PROFESSIONAL STANDARDS

Relevant professional standards for this assignment include AU Section 230, “Due Professional Care

in the Performance of Work,” AU Section 311, “Planning and Supervision,” AU Section 326, “Audit

Evidence,” ET Section 52, “Article I-Responsibilities,” ET Section 53, “Article II-The Public Interest,”

ET Section 54, “Article III-Integrity,” ET Section 55, “Article IV-Objectivity and Independence,” ET

Section 56, “Article V-Due Care,” ET Section 57, “Article VI-Scope and Nature of Services,” and ET

Section 102, “Integrity and Objectivity.”

SUGGESTED SOLUTION

What alternatives are available to Brent in regards to the audit of payables? [1] What are the pros

and cons of each alternative?

(a) Skip audit steps as Megan suggested, (b) “Eat time” as Scott suggested, (c) Do the job

quickly, but do it right and record as many hours as it takes, regardless whether you come in

under budget or not, (d) Go talk to John and express your concerns over the matter, (e) Go to

John’s “mentor” or supervisor—the engagement manager or partner—to discuss the matter and

seek advice.

a) Pro: Skipping audit steps will allow Brent to complete the work in less time, thus allowing

him to come in under budget and to spend some time with his wife.

Con: Skipping audit steps can lead to inaccurate audit decisions. Material misstatements

could go unnoticed by the firm, leading to an inaccurate audit opinion. This alternative also

raises a serious ethical issue with serious possible consequences for the auditors involved.

b) Pro: “Eating time” will mean a lot of extra “off-line” work for Brent, but he will come in

under budget and he may be recognized as someone who can get the job done.

Con: “Eating time” will create inaccurate and progressively tighter budgets in the future, as

the case suggests happened last year. “Eating time” also results in audit time records doing a

poor job of reflecting the actual cost of...