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You are an auditor on the Bobby Limited (Bobby) engagement for the financial year ending 31 December 2017. Bobby is a NSW-based industrial materials company engaged in the production, distribution and sale of construction materials and aggregates including sand, gravel, crushed stone and geosynthetic aggregates. You are in the process of planning the Bobby audit and have noted the following information:
Based on the information above, describe three (3) significant audit risks which might result in material misstatements in Bobby’s financial report for the period ending 31 December 2017. For each risk, indicate the key account and primary assertion at risk, and provide a specific and practical substantive test of detail to gather audit evidence in respect of the identified risk.
For each of the three (3) risks, identify:
(i) Explanation of audit risk
(ii) Key account affected
(iii) Primary assertion at risk
(iv) Substantive test of detail
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