2. Which of the following will most likely indicate the existence of related parties? a. Writing down obsolete inventory prior to year-end. b. Failing to correct deficiencies in the client's internal control. c. An unexplained increase in gross margin. d. Borrowing money at a rate significantly below the market rate. 3. Which of the following is least likely to be included in the auditor's engagement letter? a. Details about the preliminary audit strategy. b. Overview of the objectives of the engagement. c. Statement that management is responsible for the financial statements. d. Description of the level of assurance obtained when conducting the audit. 4. When approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor. This is a necessary procedure because the predecessor may be able to provide the successor with information that will assist the successor in determining whether a. The predecessor's work should be used. b. The company follows the policy of rotating its auditors