Kamla Harris is an audit senior at Trump & Biden, a large international audit firm. He has been asked by the audit partner to evaluate the following audit risks of a major international client. For each of the audit risks described below complete the following:

9. Identify the impact (i.e. increase or decrease) on the component(s) of audit risk affected and explain why it is an audit risk; and

2. Identify the prime audit assertion(s) to be tested and the key account balance(s) affected; and

(iii) Identify the best audit procedure you would use to reduce the risk of material misstatement.

While auditing the client’s payroll processes the audit manager has noted in the working papers that the client requires: (1) the employee’s working time records are approved by their direct supervisor before processing; and (2) where hours claimed in any pay period exceed a pre-determined maximum level the details are shown on an exception report that is reviewed and approved by the area manager before payment is made.

Answer rating: 100% (QA)

ANSWER 1An auditor would be concerned about the engagement risk throughout the audit process Accepting an engagement with high risk tends to have a negative impact on the reputation of the auditors Th... View the full answer