Specific account balance: 1,00,000

(a) Explain why the account balance is at significant risk of material misstatement.

The total budget of the company is $5,00,000 in which $1,00,000 is the balance of risk of material misstatement. The hazard that the fiscal summaries misquoted to a material degree of an association in the danger of material misstatement. It can emerge from assortment of sources, explicit variables as well. In our NEC Company, associated with outer elements has influenced the decisions which makes pressure to accomplish certain target and to control fiscal reports. It has a high level of judgment associated with business exchange, which presents hazard to make a blunder that an unpractised individual is bound to. It is certain that an estimation mistake will be made if noteworthy assessments must be remembered for exchanges. Staff creates more error, when a business participates in non-routine exchanges for which it has no control. It is bound to be recorded mistakenly, when the exchanges where a business connects with profoundly complex.

(b) Explain the key assertion at risk of not being valid.

(c) Detail one (1) relevant substantive audit procedure to address the assertion at risk as identified in b) above.

(d) Detail one (1) relevant practical internal control that would mitigate the risk in relation to the assertion at risk as identified in b) above.