Michael is a senior auditor at Inder Auditing firm. Michael is planning to audit the sales of ABC Ltd, a furniture manufacturing company. In a discussion with senior management of ABC Ltd Michael gathered the following information about ABC Ltd:

• There is high staff turnover
• The general manager is a very powerful person
• ABC Ltd has a very complex business structure
• No authorisation is made to purchase orders sent to the suppliers of ABC Ltd

Required

Based on the above information

1. What is the risk involved in auditing ABC Ltd? (1 mark)

2. What is the level of Detection Risk Michael should set to audit the sales of ABC Ltd? (1 mark)

3. What is the materiality level Michael should set for the sales transactions of ABC Ltd? (1 mark)

4. What will be the appropriate audit strategy Michael should adopt for auditing the sales transactions of ABC Ltd? (1 mark)

5. What is the level of audit evidence Michael should collect in auditing the sales transactions of ABC Ltd? (1 mark)