Posted: February 28th, 2017
Step 2 The GAAS specifically says in Auditing Standards: Standards for Field Work (3), that the auditor must obtain sufficient appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion relating to financial statements. Similarly, section 56 article V Principles of Professional Conduct, AICPA requires that the auditor should exercise due care, however, in case of Cendant, Ernst & Young did not ask CUC executives for documentation to support their financial statements and never reviewed hundreds of improper entries made after quarters closed. Ernst & Young did not exercise professional skepticism and there were close ties between Ernst & Young and CUC financial executives.
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