QUESTION 2: [20 Marks) You are an auditor in Ndwele & Co, and you are to perform substantive analytical procedures for Brazuka Co, to establish the reasonableness of the payroll expenses for the year then ended. In the course of your audit you obtain the following information which you think is reliable: i) Brazuka has sound internal controls with all expenditure cycles including the payroll. Your firm has noticed insignificant control exceptions with payroll cycle to warrant further attention in the prior audits. The audit junior, Chogo has verified with no exception this year control tests on payroll. The financial statement draft accounts for Brazuka include TZS 56,528,000 for the payroll expenses for the current year. ii) The number of staff in Brazuka Co. remains the same as previous year except for one new director who was hired at the beginning of the year. Chogo verified from inquiry of Finance Manager, that the annual pay for the new director amounts to TZS 12,000.000 11) The previous year employee cost was TZS 50,000,000. The management has however committed to continue paying 10% annual increment to maintain the living standards of its employees. iv) The annual profit before taxes for Brazuka this year is TZS 125,000,000 Ndwele Co. has an internal practice to use 5% of profit before tax as the tolerable level for evaluating misstatements for clients with similar risks as Brazuka. Required: a) Giving three assumptions, what should be your independent expectations of the payroll expenses for the current year? (7 marks) b) Based on the information provided determine the threshold for evaluating misstatements. (3 marks) c) Are the payroll expenses reasonable? (6 marks) d) Comment on the need for further audit procedures on payroll expenses. (4 marks)