Brad and Brandy, two college seniors majoring in accounting are discussing their auditing class. During their last class, the professor discussed management letters and emphasized the importance of the external auditors sending these in a timely basis. Brandy tells Brad that she doesn't see the importance of these letters, and why the auditors would spend time apprising management of things they should already know. Which of the following responses by Brad would be most appropriate?

• Generally accepted auditing standards require that for publicly-traded companies, the internal auditors draft the management letter and notify management of deficiencies which need to be remedied. Once management remedies any noted deficiencies, the internal auditors are in a position to issue a clean audit opinion on internal control.
• You're right! It does seem like a waste of time and resources. Surely the external auditors have more important things to focus on than advising management about things that they should already be aware of.
• An external auditing firm typically utilizes a management letter to notify management of material weaknesses in internal control which need to be remedied. This letter is an important component of the auditors' liability in any future litigation, and is used extensively by auditors to eliminate any potential liability.
• The management letter is an important tool utilized by the external auditors to apprise management of deficiencies and weaknesses in internal control in a timely manner. The auditor can also use this communication to make recommendations to fix or improve any controls.