The opportunity has arisen for your firm to seek appointment as auditors of Supersave Ltd., a supermarket chain of 20 stores which operates a sophisticated computerized stock control and re-ordering system. You learn that Supersave Ltd. has also invited three of your competitors to produce a written presentation, the standard of which is crucial to progressing to the next stage when the company will select two firms to make an oral presentation. Given the complex systems within its business, Supersave Ltd. is particularly anxious to establish the ability of your auditing procedures to deal with the business risks and has asked you to set out as part of your presentation your approach concerning:
audit risk that is, the degree of misstatement through errors or irregularities and how your procedures would seek to address it in the business of Supersave Ltd.
Materiality and how this might be applied
sampling and the extent to which it might be appropriate to use this technique
analytical review and its contribution to the efficiency of your audit process.

You understand the need for Supersave Ltd. to have a high level of confidence in your firm’s approach to highly computerized clients, and you have the task of drafting the sections of your firm’s written presentation to demonstrate how your procedures would be likely to apply to this client.

Required
Draft the section of the written presentation to Supersave Ltd. which deals with these four separate aspects of the audit approach. (Total: 24 marks)