You are conducting the audit of Wollongong Paintball Ltd for the year ended30 June 2020. Wollongong Paintball pays its employees on a weekly basis. The keycontrol over payroll is that Jane Livingstone, the human resources manager,reviews and approves the payroll based on the payroll report produced by thepayroll department.

The tolerable rate of deviation for this controlhas been set at 10 per cent and you have tested this control using a sample of tenweekly payroll reports. From this test of controls, eight of the weekly payrollreports were found to have been appropriately reviewed and approved by Jane. For the other two payroll reports, the following was found:

Payroll report	Reviewed by Jane?	Explanation
25 February 2020	No	Jane did not review this report as she was busy with handling employee disputes
3 April 2020	No	Jane was on annual leave for one week during this period and Wollongong Paintballs CFO reviewed and approved this payroll report. Jane reports to the CFO.

Required

(a) Indicate whether the payroll control can be relied upon and justify your answer. Explain the effect on the planned substantive tests for payroll. (10 marks)

(b) Assume that the tolerable rate of deviation for this control has been set at 0%. Explain the impact this would have (if any) on the planned substantive tests for payroll. (5 marks)

Question 2B

Youare the audit senior on the audit of Corrimal Engines Ltd (CEL) for the year ended30 June 2020. The auditors report needs to be signed on 31 August 2020, and the audit manager has requested you to confirm the accounts receivable balance. The accounts receivable balance was $15 178 543 as at 30 June 2020 and is considered material.

AELs customer payment terms are 30 days from the date of the invoice. 10 customers represent 70 per cent of the accounts receivable balance outstanding as at 30 June 2020. The remaining 30 per cent is made up of numerous smaller amounts, most of which have been outstanding for more than 60days.

Required

(a) Identify two key factors that you would consider when designing a sampling approach for accounts receivable confirmations for CELs accounts receivable balance. Explain your answer.