Auditing and assurance question:

While reviewing the travel expenses of one of Arimba's subsidiaries, Aruba, you have noted potential for fraud in relation to the use of company credit cards. All Aruba staff members in managerial positions who undertake business travel are issued with company credit cards. Staff members with credit cards are required to acquit their credit card expenditure monthly through the company's expense management system. Acquittal of credit card transactions involve the staff member identifying the appropriate account which the expenditure is to be charged to and attaching the original tax invoice and relevant supporting documentation. The expense management system produces a report summarising expenses by nature of expenditure and by department that is sent to the financial controller at the end of the month. Your discussions with the financial controller indicate that she focuses on expenditures in excess of $2,000, and ensures that appropriate supporting documentation for these expenses is attached. Reviews of expenditures below $2,000 are only undertaken by the financial controller on an intermittent basis.

(a) Identify the key assertion at risk and outline your assessment of inherent risk/s and control risk/s in relation to Aruba's travel expenses account.

(b) For the assertion identified in (a) above in relation to Aruba's travel expenses account, identify the appropriate audit approach and the level (none, small, medium, extensive) and nature of audit procedures (tests of controls, substantive analytical procedures, substantive tests of details) to be undertaken. Justify the audit approach you have suggested.