Steve and Betsy, two audit managers assigned to the audit of Merced LLC, are discussing how a client's system of internal control is related to the financial statement audit with a new staff associate, Kendra. Kendra is excited to learn more about internal control as she knows it will help her audit career, and asks Steve and Betsy to explain how a client's internal controls are related to the financial statements. Which of the following statements by Steve and Betsy would be most helpful to Kendra? Generally accepted auditing standards require the external auditors to first perform substantive testing on the client's financial statements. Once this is complete, the auditors will be in a better position to determine which controls they may need to test, and to what extent. Due to time and financial constraints, the external auditors typically audit either a client's system of internal control or the financial statements. While auditing both is ideal and represents a high level of assurance, it is typically impractical and rarely done by auditing firms. The external auditors usually start by examining a client's system of internal control, as if controls are strong and effective, the auditor may be able to place more reliance on them. Once the auditor has tested selected controls, the auditor will be in a better position to determine the nature, timing, and extent of substantive procedures to conduct. None of these answer choices are correct