Reference no: EM132608496

Question - Sarj Randawa is planning the audit of his favourite client. The company is a manufacturer and retailer of office supplies with its head office in Vancouver, BC. The following information has come up during the planning of the audit. For each item:

1. Identify which audit risk model component it impacts the most: Inherent risk, Control risk, or Acceptable audit risk

2. State whether the risk will be either: Higher or Lower

3. State whether it will result in: More work or Less work

For each requirement above, your response should be one of the exact words provided as options above as the exam will be marked automatically.

1. The company has entered into a number of complex financial derivative transactions and they have been having difficulty in determining the appropriate inventory obsolesce balance to record.

2. There appears to be more related party transactions this year.

3. The company is a private company but will be going public this year and is planning to sell their shares on the Toronto Stock Exchange.

4. During the planning stage of the audit, your firm has noted that the company has reduced the number of management. As a result, some of the previous management review and approvals have been eliminated this year to save money.