Latifa Hussein is an audit senior in charge of planning the audit of Al Ahlia Emarat Hospital and her firm has audited the entity for previous 5 years. During the audit planning meeting with the manager and partner in charge of the engagement, Latifa noted that the entity recently adopted an IT based accounting system to replace its manual system.

The manager and partner has limited experience with IT based accounting system and are relying on Latifa to help them understand the audit implications of the entitys change, Consequently, Latifa has to respond to a few concerns regarding automated accounting systems.

Required:

a) Refer to the case and evaluate the effect of this change on the five components of internal control in Al Alia Hospital. (10 marks)

b) Assess at least two factors that Latifa may consider when deciding whether to use reliance strategy or substantive strategy as source of evidence for this entity. (3 marks)

c) Determine the appropriate strategy (reliance strategy or substantive strategy) Latifa is most likely to recommend if she finds evidence that the new system is working effectively. (2 marks)