Reference no: EM132990480

Question - You are an auditor planning the overall financial statement for the audit of Truix Co. Below is a description of Truix's operations.

Truix is an owner managed private company. The owner, John Truix is heavily involved in managing the day to day operations of the company. Nothing gets approved for purchase without John's signature of approval. The company has one bookkeeper, who is currently in the 4th year of a university program to become an accountant. John noted that the bookkeeper regularly struggles with recording depreciation expense and understanding how to track inventory.

During the year, Truix experienced significant growth in operations, as demand from overseas for their products has increased tenfold. To keep up with the growth, Truix obtained a bank loan to finance the purchase of new manufacturing machinery. The bank requires an audit to be done annually, with this year's audit being the first one.

Provide in bullet point form 3 increasing and 2 decreasing overall financial statement risk factors (think inherent and control risks). Then conclude on the overall financial statement risk level.