You are the senior auditor responsible for the audit of LakeMac Limited for the year ended 30
Question:
You are the senior auditor responsible for the audit of LakeMac Limited for the year ended 30 June 2023. LakeMac is a high-tech company, producing computer chips for electrical manufacturing companies from many countries. The company relies heavily on high-tech materials imported from US and Europe. While planning for the audit, you were told that during the last quarter of the financial year, the company had employed a treasurer. While the treasurer was not familiar with the uniqueness of LakeMac's industry and its internal control systems, the company was happy that (in the financial year 2023) the treasurer realised a $2 million profit through foreign-exchange transactions in USD with major suppliers in the US.
Required
1. Explain what component/s (i.e. inherent/control/detection risk) of audit risk would be affected, and how the component/s impact the audit risk.
2. What would be the audit strategy for the matter? Identify and explain key accounts and assertions at risk.
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley