MO has a high volume of casual staff who work during peak season to support the increase in workload in the following main areas:

1. distribution: warehouse staff to pack, store, and receive goods

2. drivers: to deliver goods to retail stores

3. sales and marketing: MO representatives to operate at the retail stores to sell the range of products and manage the stock

4. administration: data operators and clerical staff to process the purchase orders and sales orders Other relevant facts about MO’s employee profile include the following:

1. The peak selling periods when casual staff are required represent approximately eight months of the year. For the last three years, the average number of casual staff has been 120 per year.

2. The turnover of permanent staff is approximately 15 per year. There are currently 75 permanent staff on the payroll. The numbers have risen by 20% in the last two years.

3. There are a variety of industrial awards that support the wage and salary conditions of MO staff , depending on whether they are casual or permanent and whether they work in the warehouse or in the office. Casual staff do not receive annual or long service leave entitlements.

Required

Your team has identified payroll expense as a high-risk area, so for the payroll expense:

a. Identify two key assertions at risk with respect to the casual employees and provide a brief explanation as to why they are at risk.

b. For each assertion, describe a specific practical substantive test of detail that would be appropriate to address the risk.

c. Given the information above, do you consider the use of analytical review to be appropriate and effective in relation to MO’s payroll expense? Justify your answer.