#2 Professional skepticism and professional judgment

Question 1

Auditor Bias Type

Answer 1

1- Availability bias: overweighing readily available information.
2-Confirmation bias: overweighing information that confirms pre-existing belief
3-Overconfidence bias: Overestimating one’s own ability
4-Anchoring bias: Overweighing an initial piece of information
5-Automation bias: Relying too heavily on output generated by an automated process

Question 2

Elements of engagement letter
(“FACSIMILE”)

Answer 2

*(F)ees
*(A)uditor’s responsibilities
*(C)onfirmation of engagement
*(S)cope and objective
*(I)nternal controls
*(M)anagement’s responsibilities
*(I)rregularities (fraud)
*(L) I(L)legal acts
*(E)rrors

-Engagement letter should be signed by both parties.
-AICPA require CPA to maintain confidential client information unless permission granted by client. Without consent are allowed by:
>compliance on a legally enforceable subpoena or summons
>inquiry by AICPA trial board
>Quality control peer review