Question: Cloud, the auditor assigned to perform financial statement audit for Tin Company, was having a meeting with the client's representatives. Cloud was explaining to them

Cloud, the auditor assigned to perform financial statement audit for Tin

Cloud, the auditor assigned to perform financial statement audit for Tin Company, was having a meeting with the client's representatives. Cloud was explaining to them the nature of the financial statement audit and the high-level audit procedures designed to discover misstatements. However, the client's representatives expressed their expectation for Cloud to detect all errors and misstatements in their financial statements as they want to present 100% accurate information as much as possible to their shareholders. Which among the following is the best response to this expectation? Detecting all misstatements and errors in the financial statements is the main objective of the audit so the client's expectation is valid. Audit procedures selected in an audit are designed only to discover material misstatements due to time and cost constraints. The audit procedures to be performed in the engagement should not be based on any expectation of detecting any misstatements in order to avoid bias. The extensiveness of the audit procedures planned in detecting misstatements will depend on the level of arranged between the auditor and the client

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