Reference no: EM132543243

Question - You are conducting an audit of Reveal Ltd (RL) for the year ended 30 June 2019. During the audit you discussed the audit approach for payroll with the Chief Human Resources Officer (CHRO).

While reviewing the tests of controls over payroll the following were noted in your working papers:

The tolerable rate of deviation for this test, as per the audit plan is 5%

24 employees pays were selected from the weekly payroll reports (2 per month) and tests performed as per the audit plan

2 immaterial errors were identified

These errors were discussed with the client, who corrected them based on the information provided by audit staff.

As the errors were immaterial (less than $30 each) and subsequently corrected, payroll controls are working satisfactorily and there is sufficient appropriate audit evidence to rely upon them.

i. Identify three reasons why the conclusion is incorrect.

ii. State the correct conclusion that should be reached and approach than may be taken at the year-end audit.