Part A.

The management of a team of auditors involves knowledge of professional standards and leadership of the individuals on the team. Stress and unexpected developments are not unusual events during an audit. The team leaders have to be prepared to react and make decisions that perhaps they have never experiencedbefore.

Please describe what you think are appropriate actions if you were the audit team leaderas a manager, and you had the following issues arise on the audit(treat them as individual, unrelated items):

1. Your deadline to finish the audit is in two weeks, and you, as the manger on the audit, have five staff working to finish the audit at the client’s office. One ofthe newer staff members asks to visit with you in private. This staff indicates that they need to take two days off from the audit to deal with a “private matter” and does not feel like they can describe the issue – it is very “sensitive”. What do you do?

2. One of the other new staff members on the audit seems to be spending a considerable amount of time talking to a client employee not connected with the audit work being done by the staff. While the team is expected to be friendly and interactive with client personnel, it seems like “overkill”. What do you do with this situation?

3. The client’s business involves manufacturing products in the factory next to the offices where the audit work is conducted. During your walking around the building and warehouse, you notice the warehouse staff appear to be changing labels on boxes of material on shelves of what you believe to be finished goods. This inventory was subject to physical inventory test counting a month or two earlier. What do you do after seeing this?

4. The engagement partner calls you from the office and, without going into details, asks you if a certain staff member has been acting “funny” lately. The staff person is new to the team and reports to a senior on the team – you are not that close to this staff person. What do you do?

Part B. The PCAOB web site has a section titled “SettledDisciplinary Orders”. Locatethe findings involvingCameron Terry, ofSpring, Texasfrom August 2019.

A. Describe the situations and auditissues that led to the disciplinary action by the PCAOB.

B. Any idea how a CPA from Texas picked up a client in Villa Park, California – was he licensed to do work in California?

C. What can you describe about his CPA firm? Is he still working as a CPA?

D. What do you think of the Huff’s understanding of generally accepted auditing standards? Name one specific area where auditing standards were violated.

E. Two lessons you learned from reading this finding.