Hey Chegg, I need help with one specific question. I know that in the second paragraph of the audit report, it says that Ernst & Young audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) and the last sentence of the second paragraph ends with in conformity with U.S. generally accepted accounting principles. But I can't figure whether the 1st or the 3rd choice is the correct answer. Can you help me with that and also explain why the choice you picked is the correct answer. Thank you.

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Apple Inc.

We have audited the accompanying consolidated balance sheets of Apple Inc. as of September 29, 2012 and September 24, 2011, and the related consolidated statements of operations, shareholders equity and cash flows for each of the three years in the period ended September 29, 2012. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Apple Inc. at September 29, 2012 and September 24, 2011, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 29, 2012, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Apple Inc.s internal control over financial reporting as of September 29, 2012, based on criteria established in Internal ControlIntegrated Framework issued by the committee of Sponsoring Organizations of the Treadway Commission and our report dated October 31, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP San Jose, California October 31, 2012

b. What steps do auditors take to determine whether a company's financial statements are free from material misstatement?

Auditors assess the company's system of internal controls ensure the information was prepared in accordance to GAAP. Additionally, auditors examine, on a test basis, evidence supporting the financial statement amounts and disclosures.

Auditors assess the company's system of internal controls ensure the information was prepared in accordance to GAAP. Additionally, auditors examine each transaction that comprises the financial statement amounts and disclosures.

Auditors assess the company's system of internal controls ensure the information was prepared in accordance to the SEC. Additionally, auditors examine, on a test basis, evidence supporting the financial statement amounts and disclosures.

Auditors assess the company's system of internal controls ensure the information was prepared in accordance to SEC. Additionally, auditors examine each transaction that comprises the financial statement amounts and disclosures.