PART B: This section has two questions. Answer all the questions, QUESTION 1 (18 Marks) You are the audit manager in charge of the audit of XYZ Sdn Bhd, a trading company that has been established for over 25 years. XYZ Sdn Bhd sells apparels directly to the public. The company's year-end is 31 December. Purchases for the year ended 31 December 2019 and 31 December 2020 are shown on XYZ Sdn Bhd's Profit or Loss Statements as follows: 2019 RM 70,000 Purchases Current liabilities as stated in XZ Sdn Bhd's Statement of Financial Position as at 31 December 2019 and 31 December 2020 are as follows: Ahmad Sdn Bhd All Sdn Bhd Ah Kau Sdn Bhd Ravi Sdn Bhd Total 2019 RM 50,000 2020 RM 55,000 Trade Payables XYZ Sdn Bhd maintains computerised accounting systems to record business transactions and to prepare financial statements. All transactions are summarised and recorded in general ledger and subsidiary ledgers. For purchase transacions, authorised prerumbered purchase orders, supplier invoices and good received notes will be used as supporting documents for recording the transactions. For payments made to suppliers or trade creditors, payment vouchers together with supporting documents will be used to substantiate the payments. A personnel who has the authority to sign the cheques cannot access the purchase system to initiate purchase transactions Every month the accountant of XYZ Sdn Bhd requests statement of accounts from each supplier for reconciliation purposes. The total amount of trade payables as at 31 December 2019 comprise the following creditors: 2019 RM 10,000 5,000 15,000 20,000 50,000 2020 RM 45,000 Required: a) Explain the key audit risk which is associated with trade payables and purchases and their reasons. (3 marks) b) Describe THREE (3) control activities which are implemented by XYZ Sdn Bhd for purchase and payable accounts. (6 marks) c) Identity THREE (3) appropriate substantive audit procedures that you should undertake in the audit of trade payables arising from credit purchases. For each audit procedure, state the appropriate assertions. (9 marks) 4/10