There was an audit of KBC Solutions by Carlson and Smith, CPAs, was scheduled to end on February 28, 2016. However, Rick Carlson was uncertain whether it could happen. As the review partner, he had just completed going over the work paper files of the senior auditor in charge of the engagement, Grace Sloan, and had way too many questions to wrap things up by the end of the week. Rick called Grace into his office and asked her about some questionable judgments she had made. He hoped her explanations would be satisfactory and he could move on with completing the audit. Grace failed to approve the accounting for new acquisitions of plant and equipment that were not supported by adequate underlying documentation, she also accepted the client's determinations of accrued expenses rather than make her own independent judgments Rick asked her how would be able justify relying on last year's work papers to determine the proper allowance for uncollectibles one year later?

Grace responed by saying that she was stressed and that that this was her first engagement as a senior and she wondered whether it would be her last. Grace knew she had to make a convincing case for her judgments or suffer the consequences. She responded to each point as follows.

1. The client had problems with their systems and had to contact the vendor for a duplicate copy of the relevant invoices. She expects the copy within two days.
2. The client seemed to have a reasonable basis for those judgments so she saw no reason to delay completion of the audit over the accrued expenses.
3. Although the confirmation rate on the receivables was slightly below expected norms, there was no reason not to accept the client's explanation for those not confirmed as being correct in amount and due date.

Grace knew her answers would not completely satisfy Rick. She did, however, believe there were extenuating circumstances she felt compelled to explain even though it might reflect negatively on her leadership abilities. She explained that the audit team pressured her to let certain matters go because they were behind schedule in completion of the audit. She was convinced by the majority to trust the client on outstanding issues, which included the three raised by Rick.

Question:

Please help me to critically evaluate the judgments made by Grace as the senior by using the KPMG Professional Judgment Framework.

Thank you,

Gema