esDuring the initial stages of the audit of Becker Company, a medium-sized distributor of plastic pipes across the southeastern United States, an audit intern, Sarah, is being supervised by Mike, an experienced auditor and long-time CPA. Sarah has noticed that the audit team appear to be spending a large amount of time gathering information about the client, such as any unique accounting situations the client may be in, the industry in which the client operates, etc. Sarah consults Mike as to why the audit team is spending a seemingly large amount of time on something she perceives as relatively trivial. Which of the following choices represent Mike's most appropriate response to this question? Because audits represent risk to the auditor, it is well worth the investiture of time and effort to try to learn as much as possible about the client before accepting or rejecting the client. As it only takes one or two bad clients to ruin the auditors' reputation, it is worth the time and effort spent. From a budgetary and client billing standpoint, every external audit is broken down into the exact number of billable hours to be charged to each part of the audit. If the auditors do not record the allotted number of billable hours for this part of the audit, they are likely to have to refund money to the client. During the initial, risk response phase of the audit, it is well worth the investiture of the auditor's time and effort to ensure that they learn as much as possible about the client. Even ongoing clients experience changes in their situations which the auditor will want to be aware of. Understanding the client better helps the auditor to identify locations of possible risks and misstatements. Because the auditors have agreed on the audit procedures with client management beforehand, the auditors are obliged to spend at least a predetermined amount of time examining the particulars of the client. This client represents an ongoing audit client, so the auditors have determined risk of material misstatement to be low.