Question 3: (25 marks)

Assume that you have been assigned to audit Taylor Manufacturing Company. You have completed the procedures of gathering information about the company and its environment, including internal control.

1. Describe the next stage of the audit process. (10 marks)
2. Explain how the auditors may respond to high risk audit engagements and high-risk audit assertions. (5 marks)
3. Describe the nature of further audit procedures, including when the procedures should include tests of control. (10 marks)