Factors that would affect the risk of material mistatement

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Reference no: EM13143241

1. HS has been consistently more profitable than the industry average by marketing mortgages on properties in a prosperous rural area, which has experienced considerable growth in recent years. HS packages and sells mortgages to large investment trusts. Despite recent volatility of interest rates, HS has been able to continue selling its mortgages as a source of new lendable funds

2. During 2009, HS opened a branch office in the metropolitan area 30 kms from its principal place of business. Although this branch is not yet profitable ( as a result of competition from several well-established banks), management believes it will be profitable by 2011.

3. During 2009, the company increased the efficiency of its operation by installling a new computer system.

REQUIRED:

Based only on the information above, indicate the factors that would affect the risk of material mistatement and explain why

Reference no: EM13143241

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