1. Reed, CPA, accepted an engagement to audit the financial statements of Smith Company. Reeds discussions with Smiths new management and the predecessor auditor indicated the possibility that Smiths financial statements may be misstated due to the possible occurrence of errors, fraud, and illegal acts.

Required:

a. Identify and describe Reeds responsibilities to detect Smiths errors and fraud. Do not identify specific audit procedures.

b. Describe Reeds responsibilities to detect Smiths material noncompliance with laws. Do not identify specific audit procedures.

c. Identify and describe Reeds responsibilities to report Smiths noncompliance with laws.