During the audit of GreenGrass LLC, the external auditors, FairShot CPAs, have recently sent positive confirmations to the client's bank, requesting details of both balances on deposit and loans outstanding. Once these confirmations are returned by the bank, the balances do not agree with the client's records. Specifically, the cash in deposit accounts is significantly lower and the loan balances significantly higher than the client had indicated. The best example of the exercise of professional skepticism in this situation would be which of the following? Due to the significant differences in balances in both the deposit and loan accounts, the auditor is obliged to investigate further. The most appropriate course of action would be for the auditor to request the internal audit function investigate these discrepancies and formally report the findings to the external auditors. The auditor should assume that the reason for the balance discrepancies in the deposit and loan accounts is due to the time lag. As a result, no further investigation is required or warranted. The best course of action for the external auditors to take upon learning of the significant discrepancies in the deposit and loan accounts would be to employ a team of external auditors to investigate the discrepancies, and request the client's permission to contact the bank for further inquiries, if needed. Generally accepted auditing standards do not allow for any discrepancies in deposit and loan balances, thus the auditor's most prudent course of action is to either issue a qualified opinion on this area of the audit, or disclaim an opinion completely.