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In: Accounting

You are an audit senior at Sheerin& Associates and have noted the following independent issues in...

You are an audit senior at Sheerin& Associates and have noted the following independent issues in relation to the audit of Creek Ltd:

  1. The Creek company Ltdusually carried out its stocktakeon balance date after it had closed its stores for the day but due to illness the stocktake was carried out twentydaysafter balance date.
  2. The audit of the accounting system found numerous severe internal control weaknesses during the interim audit .
  3. Due to increased competitive pressures, Creek Ltdhas recently moved the manufacture of some of its clothing lines out of Melbourne into regional areas. While Sleek Ltdsaves around 25% in costs, the manu­fac­tur­ing process takes longer and on several occasions late delivery has resulted in lost sales.

Required:

Explain the impact of each of these separate issues on your assessment of audit risk, the materiality level and the audit strategy that would be adopted.

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