a MOZAR is a small audit firm which has recently accepted to be the auditor of BNB after a pre- engagement investigation

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A Mozar Is A Small Audit Firm Which Has Recently Accepted To Be The Auditor Of Bnb After A Pre Engagement Investigation 1 (48.85 KiB) Viewed 36 times

a MOZAR is a small audit firm which has recently accepted to be the auditor of BNB after a pre- engagement investigation. During the planning of the audit, the auditor has noted the following information regarding BNB: BNB is a listed company operating in the financial services sector BNB has a large network of subsidiaries, associates, and foreign branches The company does not have an internal audit department and its audit committee does not include any members with a background in finance as suggested in the corporate governance guidelines One of the managers of BNB had problems with the justice a few years ago concerning fraud suspicions. There is a system of physical inventory at the end of the year. All purchase transactions with an amount higher than €300 must be approved by the financial direction The software system used to prepare the financial statements is very old and has not been updated. It is the Audit firm's policy to keep the overall audit risk below 5% Inherent risk and control risk are assumed to be 60% cach Questions : Complete the table below to identify inherent and control risk wwwxiuted to the auditee (you have to identify at least 5 elements of concern) (40p) Risk Inherenkor Control ? Why it's a risk Consequences on the audit process 1 2 2/ What should be the level of the detection risk i MOZAR will accept the audit mission? (Spts) 3/ How can the audit firm change the detection risk? (Spts)