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You are the audit senior at East & West and are conducting the audit of Relaxing Pool Ltd for the year ended 30 June 2018.
You are the audit senior at East & West and are conducting the audit of Relaxing Pool Ltd for the year ended 30 June 2018. Relaxing Pool retails spa pools and has stores across Australia.
The audit assistant, John Cummins, has carried out tests of controls over payroll. An extract from his audit working papers is as follows:
- The tolerable rate of deviation for this test, as per the audit plan, is 5 per cent.
- Twenty-four employees pays were selected from the weekly payroll reports (two per month) and tests performed as per the audit plan.
- Two immaterial errors were found.
- These errors were discussed with the client, who corrected them based on information provided by audit staff.
As the errors were immaterial (less than $30 each) and subsequently corrected, payroll controls are working satisfactorily and there is sufficient appropriate audit evidence to rely upon them.
Required
- Identify three reasons why the audit assistants conclusion is incorrect
- State the correct conclusion the audit assistant should have reached
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