Reference no: EM132803464

Deborah Adams issued an unqualified opinion on the Lenox, Inc. audit. Deborah performed the audit in accordance with generally accepted auditing standards and exercised due professional care. Subsequent to issuing the report, Deborah discovered that the inventory manager of Lenox, Inc. was stealing small amounts of inventory. Based on her audit, Deborah determined that the amount would have been considered immaterial with respect to the overall value of the inventory. Later, Deborah received a call from Stanley Cooper, President of Lenox, Inc. requesting a refund for the audit fees paid to Deborah. Stanley believes that Deborah must not have properly performed the audit because she did not discover this fraud. In addition, Stanley is concerned that the Lenox, Inc. financial statements are not fairly presented and must be re-audited based on Deborah's inadequate audit.

Problem 1: How would you recommend Deborah respond to Stanley's assessment?