Michael is a new employee in the financial reporting department of Goldberg Corporation, a mid-size publicly held corporation with annual revenues of $75 million. As Goldberg Corporation prepared for its annual audit, his manager came to him to complain about the auditors. Their audit fees were so high, yet every year they never found all of the mistakes made by the staff in Goldberg Corporation. One year, he explained, they even missed a $5,000 fraud.

Required:
(a) How can Michael use the objectives of an audit to help his manager understand the value that the company receives from an audit?
(b) What concept can Michael use to explain that missing a $5,000 fraud in a company with revenues of $75 million dollars does not indicate that the auditors performed an ineffective audit?