Prior to delivery of the firm's engagement letter to the Company's CFO for signature, you have asked one of your staff, Jacob, to review the DRAFT of this letter that has been prepared by the administrative support personnel in your office. The support staff have merely rolled this letter over from the prior period and changed the dates. After completing his review, Jacob comes to you and tells you that he believes a portion of the DRAFT is in error. While discussing this with you he points to the following item that he has highlighted and tells you that on his last engagement, the abbreviation GAAS had been replaced with "we will conduct our audit in accordance with the standards of the PCAOB." We will conduct our audit in accordance with GAAS. As part of an audit in accordance with GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit.

 Required Make a summary of your follow up conversation with Jacob relative to his discovering this error or to describe to him his misunderstanding of the nature of your firm's audit of the Company.

Answer rating: 100% (QA)

During our followup conversation I thanked Jacob for his diligence in reviewing the draft engagement ... View the full answer