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Dear tutor,
Can we identify audit risks from the audit strategy response by Neegan Associates (Component auditor) i.e.,:
1) Insufficient audit procedures on the payroll i.e., joiners and leavers not audited, analytical procedures not performed on the number of employees,
2) Sale of building to group CEO which is a related party transaction which needs to be disclosed in FS etc.OR we should just consider the extent of reliance on the component auditor in audit risks part?
Thanks and regards,
The requirement is:
“(a) Using the information in ALL exhibits, evaluate the audit risks to be considered in planning the Group audit. (24 marks)”
So in principal – yes – there may be audit risks in Exhibit 4 that will earn marks in (a). However, for the same reason that I explain here, you might not find all such points in the model answers https://opentuition.com/topic/pegasus-co-sep-dec-2020-part-a-only
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