Amelia Vadilia is a junior auditor working on the audit of Activia Linens Company. Amelia performed an inventory count where she noticed an unusually large amount of green fabric for use in manufacturing Activia products. When she inquired with the warehouse manager about why the quantity of green fabric was disproportionate with other colors the manager replied by saying that green fabric products never sells and has been sitting there as long as I can remember. When Amelia looked over the inventory ledger, she noticed these materials were accounted for and totaled $220,000. Because the materials were recognized in the accounting records and the reasonable explanation provided by the warehouse manager, Amelia did not see a need for further inquiries. She documented her work in the audit file and proceeded to seek the advice of the manager on the audit, Michael Visco. Michael commented, Activia is long-standing client, always pays their fees on time, and has never had any inventory issues in the past. They will obviously use the green fabric in production at some point, so I would suggest removing any notes of the mater in the audit file and continue working on other audit areas. Amelia did not feel great about this discussion with her manager and did not know how to proceed knowing there is likely an inventory obsolescence issue.

Required:

1. Did Amelia use professional skepticism in her decision-making process? Explain all instances where Amelia did and did not apply professional skepticism during her audit of Activia Linens Company.
2. Discuss the ethical dilemma presented to Amelia by identifying each step of the ethical dilemma framework.