Reference no: EM133123299
Question - You are the audit manager responsible for auditing Hay Bright Limited's (HB) financial report for the year ended 30 June 2021. HB is an Australian based company and its major business includes producing various types of consumer goods.
In the audit planning stage, you had a meeting with HB's CEO Jeff and knew that HB has started to source for international customers in 2021 due to the falling of local demand and immense pressure to report higher sales. Jeff is excited to be able to launch HB's products to the rest of the world. Jeff noted that despite their firm size, they did not have an internal auditor and thus HB had no relevant internal audit reports.
Recently, HB started to produce hand sanitisers in response to the global shortage. However, there are new strict government policies (including a minimum required alcohol content) surrounding the production and sale of hand sanitisers. Jeff is worried that its hand sanitisers may not meet the strict government policies. Following recent news of increase hacking on companies in Australia, HB has plans but not implemented back-up procedures that relate to the ability to reconstruct transaction data if the current version of the file is damaged by a hardware or software error. Jeff also remarked that the Human Resources manager was sick during the last two weeks of June, and wages in June may have been combined and processed together with the wages in July.
Required -
(1) Based on the background information, identify three (3) inherent risks for HB.
(2) For each of the inherent risks, explain why you believe they are inherent risks, and
(3) Provide one account and one assertion that is most at risk of material misstatement.
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