Q1) Table 13.2 (page 334) identifies three risks typically encountered when preparing a budget. (a) Analyse the degree of exposure to each of these risks for the preparing the budget process at AB HiFi. (b) Determine how many of the common controls described in table 13.2 are present in the preparing a budget process at AB Hi-Fi. TABLE 13.2 Activities in preparing a budget Usually Activity ll Activity conducted by: 1.1 Determine Budget staff. budget department values managers 1.2 Record Budget budget officeri details various departments budget inputs Activity description Determine budgets for revenue and expenditure items for the fol lowing period. This may be calculated by referencing historical transactions and indexing by some estimated percentge amount. or by analysing proposed activity levels for the future period and then calculating estimated revenue and expenditure based on predicted activity levels. The approved budget totals are input into the central computer to establish the budget levels for future periods. Typical risks encountered U nderl overestimating revenue and expenditure Data entry errors Common controls Independent approval of budget estimates Preparation of estimates by operational managers Aggegation of department budgets totals and independent approval of overall budget totals Tight linkages between budget values and performance monitoring systems Edit checks on input Reasonability checks Using batch totals Independent approval of final