$1.$ Fitzgerald CPA firm is preparing to start their first ever audit of American Enterprises, Inc., a wholesaler and distributor of car batteries and other electrical components throughout the continental United States. An initial meeting with the client caused the auditors to note that the client's systems and operations are technical and very complex, which is also reflected in a more complex system of internal control. As a result of this, which of the following represents the most prudent audit strategy?

Upon learning of this increased level of complexity in the client's systems, processes and internal controls, the auditing firm should consider the extent of the documentation that will need to be gathered to support any conclusion on internal control. The auditor will also carefully consider the skills and experience levels of the auditors assigned to the engagement.

In consideration of this level of complexity in the client's operations and internal controls, the auditor should notify the client in writing that the auditing firm is preemptively withdrawing from the engagement. This is often prudent in order to protect the reputation of the firm.

None of these answer choices are correct.

$2.$ During the audit of publicly traded Parkland LLC$,$ the external auditor, Hewsome CPA Firm is testing the client's system of internal control early in the fiscal year. One of the auditors CPAs noted a significant internal control deficiency, of which the client's management was apprised. Upon learning of the significant deficiency in internal control, the Chief Financial Officer apprised the auditors that the firm would work to correct the deficiency as soon as possible. If Parkland LLC is able to remedy this deficiency before conclusion of the audit, what action should the auditors take?

The auditors should document the actions taken by management to fix the significant deficiency in internal control. The auditors will want to test this control during the following year's audit to ensure it is working effectively.

The auditors should consider retesting the corrected internal control to ensure that the control is now effective. If evidence is gathered of the control's effectiveness, the auditors should issue a clean audit opinion on the client's system of internal control.

Generally accepted auditing standards require that when the auditor finds a significant deficiency in internal control, the auditor reports the deficiency to those charged with governance and the Securities and Exchange Commission.