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You are an audit senior at Johnson & Associates and have noted the following independent issues in relation to the audit of Block Ltd: (i) The Block company Ltd usually carried out its stocktake on balance date after it had closed its stores for the day but due to illness the stocktake was not carried out until twenty days after balance date. (ii) The audit of the accounting system found numerous severe internal control weaknesses during the interim audit . (iii) Due to increased competitive pressures, Block Ltd has recently moved the manufacture of some of its clothing lines out of Melbourne into regional areas. While Block Ltd saves around 15% in costs, the manu¬fac¬tur¬ing process takes longer and on several occasions late delivery has resulted in lost sales. Required: Explain the impact of each of these separate issues on your assessment of audit risk, the materiality level and the audit strategy that would be adopted.
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