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Question: you are conducting the audit of abc ltd which operates...

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You are conducting the audit of ABC Ltd which operates a large retail chain across Australia. In your discussions with management, you identify that they have had a lot of transport issues this year which has meant that they could not get as much stock as they normally would delivered and that their stock has often been held up on trucks and ships. Which of the following is true in relation to the audit. a) The overall audit risk would need to increase due to the danger that stock is incorrectly counted and recorded at year end. b) Control risk will increase which will mean that detection risk will need to decrease in the audit. c) The level of materiality will need to increase because there is more change of errors. d) A more substantive audit strategy on the stock would be required due to a lower detection risk approach required.

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