Substantive testing approach and risk For more than 20 years, the Give for the Kids Foundation has engaged in a range of fund raising activities in order to provide disadvantaged children with clothes, learning materials and sports equipment for school, as well as providing toys and other gifts at Christmas. The foundation is exempt for income tax purposes, but the rules in this regard are complex and any activity that might be considered profit-making could be taxable. There is a detailed constitution which sets out the governance structure for the foundation, as well as prescribing how the income can be spent and sets limits on operational expenditure to ensure that the maximum amount of funds raised can be put to the charitable purpose. Funds are raised in the following ways. 1. Fundraising events. The foundation receives funding from local government as well as corporate sponsors to cover the cost of running events, the foundation raising funds by charging fees to those attending these events; income also includes the auctioning of donated prizes. 2. Donations of sports equipment, clothing, toys and so on from individuals and companies. 3. Bequests left by generous individuals on their death. 4. Cheques and funds transfers paid directly into the foundation's bank account. 5. Cash collections at shopping centres and other locations. Funds to cover the costs of running fundraising events are received on the basis that they will be applied to specific purposes. Reports are required to be presented to the donors identifying how the amounts donated were spent. In some cases, these reports must be audited. Cash and other donations may also come with restrictions. You are planning the audit of the financial report. Required (a) Explain why a substantive testing approach is likely to be appropriate for the Give for the Kids Foundation financial report audit. (b) Identify and explain the inherent risk in the information provided