Two senior audit managers, Deana and Alice, are discussing the system of internal control of one of their biggest clients with Rudy, a recent college graduate and audit trainee. Rudy is inquiring as to what exactly a deficiency in internal control is, and asks them to explain. Which of the following represents the most appropriate response to this question?

		Deficiencies in internal control are considered separately and in isolation when the auditor forms an opinion on internal control.
		If a deficiency in internal control appears to exist, the auditors will typically adopt a reliance strategy and decrease substantive testing.
		A deficiency in internal control is present when the client's statements are materially misstated. If the auditor detects a deficiency, they will usually disclaim an opinion.
		A deficiency in internal control is typically present when the auditor has determined that the design and/or operation of a control is not preventing or detecting misstatements in a timely manner.

Brian and Stella, two audit managers, are discussing the ongoing audit of PipeCo Enterprises, a national distributor of cut and blown glass products. Brian has mentioned to Stella that the management of PipeCo Enterprises seems rather aggressive with respect to setting sales goals and other targets. A senior manager with the firm has also confided in Stella that management often override controls put in place to prevent revenue entries being recorded in the incorrect period. Based on these facts, which of the following statements best reflects Brian and Stella's concerns at this juncture of the audit?

		Brian and Stella are external auditors, so this information is not something that should be of concern to them. They are likely to pass this information along to the internal audit function, and allow the internal auditors to respond appropriately.
		Brian and Stella are likely to be concerned that top management is taking this approach, and is also overriding internal controls put specifically in place to prevent certain issues. They are also more likely to form the opinion that transaction-level controls may be weak.
		Brian and Stella will most likely respond to these concerns by interviewing senior management and requesting written assurances related to transactions being recorded in the correct period. If management are willing to provide such assurances, this will help indemnify the auditor if any litigation arises.
		Brian and Stella will be concerned about management overriding controls related to transactions being recorded in the correct period. They are likely to focus increased audit attention in this area, and will likely now adopt a reliance strategy with less substantive tests of details. (WRONG)