Refer to Professional Judgment in Context feature, which discusses PCAOB enforcement action related to the audit of Alloy Steel International. As you will recall, Robert Forbes was the audit partner in charge of the Alloy Steel engagement, and he made several critical mistakes that adversely affected audit quality.
a. What is the objective of auditing, and how did Forbes' and Bentley's actions fail to achieve that objective?
b. Why did Alloy Steel require an independent audit on its financial statements?
c. Which parties are likely users of Alloy Steel's financial statements? How might they have been adversely affected by Forbes' actions?
d. What skills and knowledge were required to do a quality audit of Alloy Steel's financial statements? How did the individuals who actually performed the audit work on the Alloy Steel engagement fail in this regard?
e. Explain how the facts in this case relate to each of the drivers of audit quality identified in the Exhibit. If a particular driver is not applicable to this case, state why.