1)Assume that you have been assigned to the audit of Wonder Manufacturing Company

a.

The next stage of the audit process after gathering information about the company and its environment, including internal control, is identifying and assessing audit risks from the audit performing circumstances.

These audit risk assessment procedures are performed to obtain an understanding of the company and its environment, including the company’s internal control, mainly to identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. These procedures include various elements, such as inquiries with management and other selected employees, analytical procedures, observations of controls in operation, and inspection of documents to show controls have been implemented.

b.

Auditors may respond to high-risk audit engagements and high-risk audit assertions in the following manner;

Auditor's responses should focus on how the team will obtain evidence to reduce the risks identified to an acceptable level.

• Making general changes to the nature, timing, or extent of audit procedures, if the risk is high extent of audit procedure also will be high.
• Emphasizing to the audit team the need to maintain professional skepticism. If the risk is high auditors' attitude towards a questioning mind and a critical assessment of the appropriateness and sufficiency of audit evidence will be also high.
• Assigning more experienced staff, those with special skills, or using experts to tackle the high risk
• Incorporating additional elements of unpredictability in the selection of further audit procedures to be performed.

c.

Further audit procedures after the audit risk assessment are;

• Identify controls and assess control risk by inspection of controls have been implemented or not.- In this procedure auditor have to evaluate the effectiveness of risk control norms in the entity.
• Performing audit documentation with step by step documentation of audit performance.- All audit performance should be documented to easily referable in the future by the upcoming auditor, or any other user to it.
• Finalizing and concluding the audit with audit report by auditors opinion - All the audit process should need to end with auditor reports in the qualified, unqualified, disclaimer, or adverse manner. In other words, an audit said to be completed only when the auditor submits a valid audit report before the board of directors.