Auditing and Assurance Services 1st Edition by Iris Stuart

Exercise 33

Adelphia
The chapter describes a fraud at Adelphia Communications and the failure of Deloitte Touche to detect the fraud.
a. What does it mean to identify a client as being "high risk" How did the auditor make this determination How does the audit of a high-risk client differ from that for a low-risk client
b. When the SEC holds the auditor responsible for detecting the fraud, what is it implying about the standards of "sufficient appropriate evidence" and "professional skepticism" for the audit Was the auditor's performance consistent with these standards
c. Describe how the assessment of Adelphia as a "high-risk" client should affect the nature, timing, and extent of audit procedures Do you believe that Deloitte Touche met these standards