the question

You are an audit senior working on the Long Range Limited (Long Range) nancial statements audit for the year ending 30]une 20X0. When planning the audit of Long Range using your audit rm's methodology, performance materiality for the audit engagement has been set at $400,000. The following is an extract from the draft statement of nancial position of Long Range as at 30]une 20X0: Statement of nancial position 3OJune 20X0 30]une 20W9 $ 5 Cash and cash equivalents ' 135,000 ' 95,000 Receivables l 997,000 l 1,205,000 Inventory l 295,000 l 250,000 PPE l 2,315,800 l 1,805,000 Payables l (954,000) l (1,105,000) Provisions l (376,000) l (250,000) Long term debt l (1,765,000) l (1,850,000) Net assets l 647,800 l 1 50,000 Which one of the following statements about planning the Long Range audit is incorrect? Tests of details do not need to be performed in relation to provisions, inventory and cash and cash equivalents as these balances are below performance materiality. OA. Tests of details need to be performed in relation to receivables as the risk we are usually concerned with for receivables is overstatement and due to ' the nature of the balance. OB O C. Tests of details should be performed in relation to cash and cash equivalents, provisions and inventory. 0 D.Tests of details would be an effective way to test the existence of payables