Stormwater Pty Ltd (Stormwater) is a company involved in the treatment of water, water supply, and distribution services in Adelaide, Australia. You are the manager in charge of the audit of Stormwater for the year ended 30 June 2020. During the interim audit, your audit senior reported the following issues:

i.The interim audit revealed that Stormwater had faced staff shortages in its Human Resources [HR] department.Martin, the HR executive, processes the payroll as well as maintains the personnel record files of all staff at Stormwater.

ii.The findings of the audit team responsible for the cash office audit found that there were many instances where reconciling items identified on individual bank account reconciliations were not investigated and/ or resolved on a timely basis.

iii. The South Australian state council recently announced in the media that there was to be a reduction in water tariffs due to recessionary conditions in Adelaide.

Required:

As the audit manager, discuss the risk arising from the three issues identified above.

Identification of issues Discussion

(i)

(ii)

(iii)