Question 3 (20 marks) A friend of yours is presently undertaking a vacation job at your...

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Question 3 (20 marks) A friend of yours is presently undertaking a vacation job at your audit firm. This is his first exposure to auditing as he has neither studied auditing at university nor worked in an audit firm previously. On glancing through an audit file, he came across the following note, and has asked you what it means, "Having completed our risk assessment procedures we are confident that the risk of material misstatement for the assertions relating to trade accounts payable is similar to that of last year. Therefore, our audit plan will be to carry out a mix of tests of controls and substantive testing." YOU ARE REQUIRED TO explain to your friend the meaning of the following terms in the context of an audit. You must link all the terms together in your explanation. 1. Risk assessment procedures 2. Material misstatement 3. Assertions 4. Audit plan 5. Substantive testing 6. Tests of controls. (4) (4) (3) (3) (3) (3) Question 3 (20 marks) A friend of yours is presently undertaking a vacation job at your audit firm. This is his first exposure to auditing as he has neither studied auditing at university nor worked in an audit firm previously. On glancing through an audit file, he came across the following note, and has asked you what it means, "Having completed our risk assessment procedures we are confident that the risk of material misstatement for the assertions relating to trade accounts payable is similar to that of last year. Therefore, our audit plan will be to carry out a mix of tests of controls and substantive testing." YOU ARE REQUIRED TO explain to your friend the meaning of the following terms in the context of an audit. You must link all the terms together in your explanation. 1. Risk assessment procedures 2. Material misstatement 3. Assertions 4. Audit plan 5. Substantive testing 6. Tests of controls. (4) (4) (3) (3) (3) (3)

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Risk assessment procedures These are the methods used by auditors to identify and assess the risks o... View the full answer