Reed, CPA, accepted an engagement to audit the financial statements of Smith Company. Reed's discussion with Smith's new management and the predecessor auditor indicated the possibility that Smith's financial statements may be misstated due to the possible occurrence of errors, fraud, and illegal acts.

a) Identify and describe Reed's responsibilities to detect Smith's errors and fraud. Do not identify specific audit procedures.

b) Identify and describe Reed's responsibility to report Smith's errors and fraud.