Stark Holidays is an independent travel agency. It does not operate holidays itself. It takes commission on holidays sold to customers through its chain of shops. Staff are partly paid on a commission basis. Well-established tour operators run the holidays that Stark Holidays sells. The networked reservations system through which holidays are booked and the computerized accounting system are both well-established systems used by many independent travel agencies. Payments by customers, including deposits, are accepted in cash and by debit and credit card. Stark Holidays is legally required to pay an amount of money (based on its total sales for the year) into a central fund maintained to compensate customers if the agency should cease operations. Required: 1. Explain how the internal audit function helps an entity deal with the risk of fraud. (14 marks) 2. Explain the responsibilities of external auditors in respect of the risk of fraud in an audit of financial statements. (14 marks) 3. Describe the nature of the risks to which Stark Holidays is subject arising from fraud. (12 marks)