Inventory of various medical supplies and drugs is a material account on the Shady Oaks Centre audit engagement. You are planning to adopt a combined audit approach for existence of inventory and rely heavily on preventive control procedures (for example, access to the dispensary and the store room being limited to a few authorized staff) to ensure the physical security of inventory. You have just completed your tests of controls in relation to physical security procedures. Your projected error rate, based on the results of your already large sample size, is higher than the tolerable error. You are satisfied that the sample is representative and the errors occurred throughout the period audited. 

Required

(a) Briefly outline the impact of the projected error rate on your planned substantive audit procedures. 

(b) Assume that all of the deviations from the internal control procedures tested (that is, all the errors in the sample) relate to a three-week period when a senior staff member was on annual vacation. Discuss how this would affect your planned substantive tests of detail.