Exercise 3:

Frank Dizon, a highly competent employee of Breezewater Sales Corporation, had been responsible for accounting related matters for two decades. His devotion to the firm and his duties has always been exceptional, and over the years, he had been given increased responsibility. Both the president of Breezewater and the partner of an independent CPA firm in charge of the audit were shocked and dismayed to discover that Dizon had embezzled more than P5,000,000 over a 10-year period by not recording billings in the sales journal and subsequently diverting the cash receipts. What major factors permitted the defalcation to the place?

Exercises 4:

Cash

The auditor has always received good cooperation from a particular client and has no reason to question management's integrity. The controller has requested that the auditor inform her about which warehouse locations that the auditor will visit during the upcoming inventory count. In addition, the controller has requested copies of the auditor's observations on the physical inventory because she wants to make sure that a good inventory was taken. Should the auditor comply with these requests? State your rationale, including a discussion of professional skepticism.