Taking into account your answer in b1.10 and b1.11, select and name one skill from study unit 2.2.2 that could have prevented the conduct in b1.1.?

Question: Taking into account your answer in b1.10 and b1.11, select and name one skill from study unit 2.2.2 that could have prevented the conduct in b1.1.?

One skill from study unit 2.2.2 that could have prevented the conduct in b1.1 is professional skepticism.

Professional skepticism is the ability to question and assess information critically, even when it comes from a trusted source. It is an essential skill for auditors, as it helps them to identify and prevent fraud and misstatements.

In the case of b1.1, the auditor could have used professional skepticism to question the client's assertion that the related party transaction was fair and reasonable. The auditor could have looked for evidence to support the client's assertion, such as independent appraisals of the assets involved in the transaction. The auditor could have also consulted with other auditors who have experience with related party transactions.

By using professional skepticism, the auditor could have identified the potential for fraud and misstatement in the related party transaction. This would have allowed the auditor to take steps to prevent the fraud and misstatement from occurring.

Here are some specific ways that the auditor could have used professional skepticism to prevent the conduct in b1.1:

• Question the client's rationale for the related party transaction. Why did the client enter into the transaction with a related party instead of an unrelated party?
• Obtain independent appraisals of the assets involved in the transaction. This would help to ensure that the price paid for the assets was fair and reasonable.
• Consult with other auditors who have experience with related party transactions. This would help the auditor to identify potential risks and to develop appropriate audit procedures.

By using professional skepticism, the auditor could have prevented the conduct in b1.1 and protected the interests of the company and its stakeholders.

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