(a) You are currently working as the audit supervisor of Tommy & Partners (TP). It is your firm's practice to provide training workshops to their new staffs and interns as part of the firm's staff induction programme. You are requested to conduct the training section this time around by Mr Ben your audit manager. As the standard procedure of your audit firm you are requested to provide a training section on matters mentioned below. Required: (i) The issues of relative risk must be considered by auditors in preparing the audit program. Discuss the difference between THREE (3) main categories of risks and any FIVE (5) factors that affect inherent risk in an audit. (8 marks) (ii) The concept of materiality is fundamental to the work of auditors. Explain the concept of materiality and how materiality affects the audit work performed. (5 marks) (iii) With reference to ISA 520 Analytical Procedures explain what is meant by the term "analytical procedures. (2 marks)(b) You are an audit supervisor of Pan and Partners and are currently planning the audit of your client, Oreo Berhad (Oreo) which produces dairy food. Its year end is 31 August 2019 and the forecast profit before tax is RM38.4 million. A directors' bonus scheme was introduced during the year which is based on achieving a target profit before tax. In order to finalise the bonus figures, the Chief Financial Officer (CFO) of Oreo would like the audit to commence earlier so that the final results are available earlier this year. The CFO has informed you that the June and July bank reconciliations each contained unreconciled differences; however, he considers the overall differences involved to be immaterial. During the year, the directors studied the useful lives and depreciation rates of all classes of non-current assets. This resulted in an overall increase in the asset lives and a reduction in the depreciation charge for the year. Stocks is stored in two warehouses and on 28 and 29 August a full inventory count will be conducted with adjustments for movements to the year end. This is due to a lack of available staff on 31 August. In June, there was a fire in one of the warehouses; stocks worth RM3.6 million was damaged and this has been written down to its scrap value of RM0.8 million. An insurance entitlement has been submitted for the difference of RM2.8 million. Oreo is still waiting to hear from the insurance company with regards to this claim, but has included the insurance proceeds within the statement of profit or loss and the statement of financial position. Required: Identify and explain any FIVE (5) audit risks, and also explain the auditor's response to each risk, in planning the audit of Omega. (10 marks) [Total : 25 Marks]