You have recently graduated from your university course and start work with an audit firm.You meet an old school friend, Nayan, for dinner you haven't seen each other for severalyears. Nayan is surprised that you are now working as an auditor because your childhooddream was to be ballet dancer. Unfortunately, your knees were damaged in a fall, and youcan no longer dance. The conversation turns to your work, and Nayan wants to know howyou do your job. Nayan cannot understand why an audit is not a guarantee the company willsucceed. Nayan also thinks that company managers will lie to you in order to protectthemselves. As an auditor, you would have to assume that you cannot believe anything acompany manager says to you. Required:

(a) Write a letterto Nayan explaining the concept of reasonable assurance, and howreasonable assurance is determined. Explain why an auditor cannot offer absolute assurance.

(b) Explain in the letter to Nayan the concept of 'professional scept icism' and how it is notthe same as assuming that managers are always trying to deceive auditors.