You are the audit senior responsible for the audit of Sampson Limited. You are currently planning the audit for the financial year ended 30 June 20X9. During your initial planning meeting held with the financial controller, he told you of the following change in the company’s operations. Sampson has planned to close an inefficient factory in country New South Wales before the end of the financial year. It is expected that the redeployment and disposal of the factory’s assets will not be completed until the end of the following financial year. However, the financial controller is confident that he will be able to determine reasonably accurate closure provisions. Required: Explain how the components of audit risk (inherent, control or detection risk) are affected in this scenario.
You are the audit senior responsible for the audit of Sampson Limited. You are currently planning the audit for the financial year ended 30 June 20X9. During your initial planning meeting held with the financial controller, he told you of the following change in the company’s operations. Sampson has planned to close an inefficient factory in country New South Wales before the end of the financial year. It is expected that the redeployment and disposal of the factory’s assets will not be completed until the end of the following financial year. However, the financial controller is confident that he will be able to determine reasonably accurate closure provisions.
Required:
Explain how the components of audit risk (inherent, control or detection risk) are affected in this scenario.
Step by step
Solved in 2 steps with 2 images
