Ruth Consultancies was hired by ABC (Pty) Ltd to audit their financial statements. Ruth Consultancies has accepted its first engagement with ABC (Pty) Ltd. Ruth is about to begin the audit. The Senior auditor also chooses you to be a member of the auditing team. So you began researching the client and the responsibilities of auditors in relation to the task at hand. You are required to: a. Explain the importance of understanding ABC (Pty) Ltd's environment. (4 Marks)

b. Examine external auditors' responsibilities in detecting error and fraud in an audit of ABC's financial statements. (15 Marks)

c. Explain the roles of the directors and auditors in the preparation of financial statements. (6 marks)