What is the auditor preliminary assessment of control risk

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Reference no: EM132641132

Question - You are performing the audit for Premium PetCare Pty Ltd (PP), who operate a luxury boarding kennel and daycare facility for dogs and cats. PP bill their customers after their pet's stay, with 30 day payment terms. The Accounts Receivable turnover has slowed in the past year, with the average collection period going from 31.3 days in the previous period to 50.6 days this financial year. PP's revenues have remained stable over the past 3 years.

In the draft financial statements, PP's interest-bearing liabilities consist solely of an interest-only 10-year bank loan of $400,000 at a fixed interest rate of with 6.17% per annum. Their interest expense in the past financial year is recorded as $30,850.

Upon assessing the design of internal controls for PP, you conclude that there is a fundamental segregation of duties present and that general IT controls are strong.

What is the auditor's preliminary assessment of control risk?

a. medium

b. none

c. high

d. low

Reference no: EM132641132

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