“Auditors are required to assess the risks of material misstatement at two levels". Briefly explain the same and state the procedures to be followed…

(a) Auditors are required to assess the risks of material misstatement at two levels :- The first is at the overall financial statement level, which refers to risks of material misstatement that relate pervasively to the financial statements as a whole and potentially affect many assertions.The second relates to risks identifiable with specific assertions at the class of transactions, account balance, or disclosure level. This means that for each account balance, class of transactions and disclosure, an assessment of risk (such as high, moderate, or low) should be made for each individual assertion being addressed. (b) Audit Procedures: The following procedures by Komal may address the validity of the account balance:- Make a selection of the purchases, review correspondence with the vendors, purchase requisitions (internal document) and reconciliations of their accounts.Review Vendor listing along with the ageing details. Follow up the material amounts paid before the normal credit period and analyse the reasons for exceptions.Meet with the company's Purchase officer and obtain responses to our inquiries regarding the purchases made without purchase orders.Discuss the summary of such issues with the client.