You are undertaking the audit of Geneva Shoes, a leather shoes retailer which has 20 stores in Sydney and Melbourne. During the audit process, the following information is obtained:

• The availability and generous return & refund policy of competitor products on low-price internet shopping sites has resulted in smaller market share of Geneva Shoes.
• The commission that salespersons receive is based on gross sales volume. To meet sales targets, some salespersons reduced the sales price by 30% without authorisation.

Required:

Explain the impact of the above issues on:

(1) your assessment of Geneva Shoes inherent risk and control risk (4 marks) with explanations.

(2) the appropriate level of detection risk and the impact this has on the audit strategy (2 marks).