Explain what risk is happening in administrative expense . explain how Inherent risk,control risk ,detection risk, audit risk are related to income tax expense .

this is an example how to follow the following structure and income statement is attached bellow where you can find the administrative expense

1.Salaries and Employee Benefit Expenses

Inherent risk is high

The inherent risk of this account is high. This account had a positive moment of $3,180,300 between the financial year 2018 and 2019. The inherent risk is high, and this could be as a result of the company growing as a result of becoming a public company and needing to hire more employees. The likelihood of this account being materially misstated is high due to the fact that it has increased in value dramatically within one year.

Control risk is high

The control risk of this account is high since a large movement requires the adjustment of controls to either make processing more efficient or allow for larger transactions. Because of this the auditor will feel less inclined to rely on internal controls and thus will want to increase the sample size as per (Houston, Peter, Pratt 1998).

Detection risk is low

The detection risk is low since the sudden large movement and possible obsolescence of existing controls means that both inherent risk and control risk is high. These two factors alone mean that the auditor will dedicate significant resources to this account in order to prevent misstatement.

Audit risk is low

The audit risk model states that by having high inherent risk and high control risk, the detection risk will need to be lowered to reduce the overall audit risk to an acceptable level. Due to the large amount of testing of evidence completed by the auditor, it is unlikely that an auditor will express an incorrect audit opinion.

Changes INCOME STATEMENT Notes 2019 2018 (S'000) ($'000 in S'000 S'000 S'000 S'000 Revenue from continuing operations 2 65,212 39,775 25,437 Cost of sales (2,079) (2,038) (41) Gross profit 63,133 37,737 25,396 Other revenue/income 2 1,936 1,203 733 Distribution expense (28) (28) 0 Marketing costs (6,956) (4,637) (2,319) Occupancy expenses (742) (887) 145 Administrative expenses 3 (19,117) (16,280) (2,837) Finance cost (7) (7) 0 Profit/(loss) before income tax expense 38,219 17,101 21,118 Income tax expense 4 (11,799) (5,348) (6,451) Profit loss before income tax from continuing 26,420 11,753 14,667 operations Profit/loss from discontinued operations 6 374 Profit /loss after income tax expense for the 26,420 12,127 14,293 year attributable to the owners of Jumbo interactive limited Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation (6) (3) (3) Reclassification of foreign exchange (374) (374) differences on loss of control of subsidiary Other comprehensive income for the year, net (6) (377) of tax 371 Total comprehensive income for the year attributable to the owners of Jumbo 26,414 11,750 14,664