Explain why professional skepticism is important in making professional judgments. What are the types of actions that a professionally skeptical auditor will take?
Refer to the Auditing in Practice feature "What Was He Thinking? An Example of Poor Professional Judgment and Low Audit Quality."
a. Briefly explain the common themes indicating poor professional judgment evident from the facts about the Prospero Minerals audit, the Cal Bay audit, and the LitFunding audit.
b. What do you think Scharfman's motivation was in explaining his conduct?
c. Why were Scharfman's actions so potentially harmful to external users of the audited financial statements?