The following are different types of misstatements that can be encountered on an audit:

1. The use of a method of valuing inventory that is not in accordance with generally accepted accounting principles 2. Accidental failure to disclose a lawsuit for patent infringement when the amount of the liability is unknown 3. The recording as capital assets expenditures that should have been recorded as repairs and maintenance 4. The inclusion of invalid accounts in accounts receivable by preparing fictitious sales invoices to nonexisting customers Required

a. Assuming the amounts are equally material, rank the types of misstatements listed above in terms of the diffi¬ culty of uncovering each one. (Most difficult is first.) Give reasons to support your answers.

b. Discuss whether auditors should have the same respon¬ sibility for uncovering the most difficult-to-find misstate¬ ment as for discovering the least difficult one. Consider this from the point of view of the auditors and the users of financial statements.