Audit risk and its components

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Reference no: EM1354194

Consider the following independent situations, all of which apply to audits of entities for the year ending 31 December 20X7:

(i) Getaway Pty. Limited is a long established firm which has been operating a boutique hotel in the Blue Mountains for over 20 years. During this time, it has adopted a conservative business strategy that has seen it produce adequate, though slightly unimpressive, results. A new CEO has been appointed to run the firm from 1 September 20X7. He has already released his plans for renovating the hotel, despite not officially serving as CEO yet. You have also heard him discuss the implementation of a new marketing strategy to boost occupancy rates.

Required:

For each of the above independent situations: (1) describe the overall impact on audit risk and provide your reasons for your answer, and (2) identify the specific component(s) of audit risk affected.

Reference no: EM1354194

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