Question 3 (14 marks) Smith is a junior on the financial statement audit of Super Computer Services Co. (SCS) for the year ended April 30, 20X0.

How should Smith respond? (2 ½ marks)

Source: Arens et al., Auditing: The Art and Science of Assurance Engagements, Canadian Eleventh Edition (Toronto: Pearson Canada Inc., 2011), Case Question 11-31, page 379, © 2011. Adapted by permission of Pearson Education Canada.