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Question - You are an audit manager in LMN accounting firm and assigned to the Zero Emission Limited audit for the year ended 30 June 2020. Zero Emission Limited is a New Zealand company listed on NZX.
In January 2020, Zero Emission Limited changed its payroll system to a new off-the-shelf system. Since this 'go-live' date, there have been some complaints by staff about underpayment of wages and annual leave entitlements due to incorrect salary packages and hourly rates being recorded in the system.
Required -
a) Identify Zero Emission Limited's key general ledger accounts that are most at risk of misstatement if the new payroll system does not operate as expected, and briefly explain the reasons for identifying each account.
b) Identify and explain THREE audit objectives at risk related to the accounts identified in (a) above.
c) Outline how the change in the payroll system could impact Zero Emission Limited's 30 June 2020 audit approach (including a discussion around the level of main audit tests).
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