• The auditors should consider the reasons as to why the risk has been assessed as higher
than normal.
• The external auditor will have to perform additional procedures to reduce the risk that the
financial statements arc materially misstated as a result of fraud. The additional risk would
mean that materiality was assessed as lower. Therefore this would result in a greater
proportion of transactions and balances being tested
• If a sales ledger fraud was suspected the external auditor would circularize debtors to
obtain third party evidence as to the value of accounts receivables at the year end.
• They would scrutinize the ledgers for indications of customers who may be connected to
the management
Kavungya answered the question on May 14, 2019 at 13:10
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