Question: Because management operates the business on a daily basis, they know more about the company's transactions and related assets, liabilities, and equity than the auditor.

Because management operates the business on a daily basis, they know more about the company's transactions and related assets, liabilities, and equity than the auditor. For example, it is extremely difficult, if not impossible, for the auditor to evaluate the obsolescence of inventory as well as management can in a highly complex business.
Given these observations, evaluate the auditor's responsibility for detecting material misrepresentations in the by management.

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