Automation Experts Inc. accepts VISA and MasterCard for any sales transaction exceeding $50.The company has not yet implemented online recording of the credit card transaction, but it does have a toll-free number to call for authorization for all sales over $50.The company has two cash registers, but three clerks work during peak times. The company processes credit cards as follows:

Blank credit card slips are maintained near the cash register along with two card imprinters.The card imprinter has the company's account identification printed by default and takes an imprint of the customer's credit card.Normally, credit card sales are rung up on the cash register, as would be done with a cash sale.The credit card receipts are kept in a separate location in the cash register.

Periodically in the day, the store manager collects all credit card receipts, separates the two copies into one for the store and one for bank, batches all the slips, and prepares an entry to later record the sales.The batches for the day are collected for a deposit.The controller then reconciles the deposits made each day with the credit card sales recorded.

In light of the above, be prepared to discuss the following:

1.Types of risks (business risk, information risk, audit risk, accounting risk, risk of material misstatements) and their impact on audit

2.Relevance of materiality and audit risk model during audit risk assessment and their impact on audit strategy

Identify the weaknesses in the above process and determine the overall risk environment at Automation Experts Inc.