US section) QUESTION TWO The risk of material misstatement refers to the risk that the financial statements are materially misstated and do not present true and fair view. The risk of material misstatement in auditing is assessed at two levels namely, (1) financial statements level and (II) assertions level. (a) (b) Define Audit Risk [5 MARKS Discuss how the Risk of material misstatement is assessed at Financial Statement level and at assertion level Inhevent VsKton tvo Irik10 MARKS) Explain how the Auditors should respond to the risk of material misstatement (c) ENCE [5 MARKS] [TOTAL: 20 MARKS QUESTION THREE In order for the auditor's opinion to be considered trustworthy auditors must come to their conclusions having completed a thorough examination of the books and records of their clients and they must document the procedures performed and evidence obtained, to support the conclusions reached. The objective of the auditor, in terms of gathering evidence, is described in ISA 500 Audit Evidence as 'to design and perform audit procedures in such a evidence to be able to draw reasonable conclusions on which to base the auditor's opinion. way to enable the auditor to obtain sufficient appropriate audit e elabty, reeai dogectmn Required: What is sufficient and appropriate evidence? (a) [9 MARKS] Explain using relevant examples how evidence gathering in a performarnce audit [5 MARKS] (b) differs from an ordinary audit engagement? TOTAL: 20 MARKS]