External auditors are obviously responsible for the audit of the financials....
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External auditors are obviously responsible for the audit of the financials. However what is their responsibility for the preparation of the financials or internal controls? O a. They work closely with management to prepare the financials b. They establish internal control over financial reporting c. Both A and B d. Neither A not B Company ABC is a small company and it is a low risk audit. The only concern that you have is inventory, which consists of very unusual items, which makes it difficult to determine their value. What are you likely to do in this situation? Increase performance materiality B. Increase overall materiality Use specific performance materiality Use inventory as the base for calculating materiality You are an external auditor. Your client has a lot of related parties, what does this mean for you? O a. The financials of your client are materially misstated b. The financials of your client are misstated, but not materially c. The client's internal controls are not functioning properly d. None of the above
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