Question
Version:0.9 StartHTML:0000000105 EndHTML:0000002456 StartFragment:0000000141 EndFragment:0000002416 For each of the following cases: (i) identify the type of risk (either inherent or control risk) and discuss briefly
Version:0.9 StartHTML:0000000105 EndHTML:0000002456 StartFragment:0000000141 EndFragment:0000002416
For each of the following cases: (i) identify the type of risk (either inherent or control risk) and discuss briefly
its effects on its impacts on material misstatement; and (ii) explain the appropriate audit response (i.e., increase
or decrease in detection risk level and materiality level).
a) The entitys management does not intend to remedy some deficiencies in internal controls identified by
the external auditor as they consider them to be minor.
(3 marks)
b) The entitys policy is to employ personnel in the finance department either with or working towards a
recognized accountancy qualification.
(3 marks)
c) The company has set up an internal audit department.
(3 marks)
d) The computer system crashed part way through the year but the IT department claim that no records
were lost.
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