Reference no: EM132621742

Question - You are currently assessing audit risk at your client Baton (Pty) Ltd, a large manufacturing company and subsidiary within an industrial conglomerate. The following information pertains to this assessment:

1. The financial director has been very evasive in answering questions.

2. Some of the products manufactured by Baton (Pty) Ltd have not kept up with market requirements.

3. Director's annual bonuses are based upon earnings.

4. The company decided to retrench its internal auditors in a cost cutting exercise.

5. Close to the end of the year a number of complex transactions relating to asset revaluations were put through.

6. The financial controller was ill for three months during the year which resulted in the debtors, bank and creditors reconciliations not being done during this period.

7. Management is regarded by the staff as being very dictatorial allowing no latitude in the performance of laid down control procedures.

8. Numerous transactions take place with other companies within the group.

Required - Indicate whether each of the above will affect your assessment of risk. If so, indicate brief explanations whether it will increase or decrease risk and whether it is an inherent risk or a control risk. You are not required to consider the information collectively.