The following questions concern auditor responsibilities in an audit of financial statements. Choose the best response. 

a. The auditor’s responsibility regarding material misstatements caused by fraud is 

(1) Less than the auditor’s responsibility regarding material misstatements caused by error. 

(2) Greater than the auditor’s responsibility regarding material misstatements caused by error. 

(3) The same as the auditor’s responsibility regarding material misstatements caused by error. 

(4) Either less than or greater than the auditor’s responsibility regarding material misstatements caused by error, depending on the circumstances. 

b. Which of the following would not have a direct impact in determining the sufficiency of evidence gathered during an audit? (1) The cost-benefit relationship of obtaining the audit evidence 

(2) The quality of audit evidence obtained 

(3) The auditor’s professional judgment 

(4) The risk of material misstatement 

c. When determining the auditor’s or management’s responsibility for compliance with laws and regulations during an audit, which of the following statements below would be incorrect? 

(1) The auditor is not responsible for preventing noncompliance with laws and regulations. 

(2) Management and those charged with governance are responsible for ensuring that the company’s operations are conducted in accordance with all applicable laws and regulations. 

(3) The auditor provides reasonable assurance that the financial statements are free of material misstatement due to noncompliance with laws and regulations. 

(4) The auditor is expected to detect the client’s noncompliance with all laws and regulations affecting transaction cycles under review during the audit itself.