The following describes a potential audit client which is in the financial services sector and has a large number of con

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The following describes a potential audit client which is in the
financial services sector and has a large number of consumer loans,
including mortgages, outstanding. i. The CEO and CFO’s compensation
is based on three components: (a) base salary, (b) bonus based on
growth in assets and profits and (c) significant stock options ii.
The audit committee meets semi-annually. It is chaired by a retired
CFO who knows the company well because she had served as the CFO of
a division of the company. The other two are local community
members – one is the president of the chamber of commerce and the
other is a retired executive from a successful local manufacturing
firm. iii. The company has an internal auditor who reports directly
to the CFO and makes an annual report to the audit committee iv.
The previous auditor has resigned because of a dispute regarding
the accounting treatment and fair value assessment of some of the
loans Required For each of the factors listed above, indicate
whether it is indicative of poor corporate governance. Explain the
reasoning for your assessment. b) The audit report provides
reasonable assurance that the financial statements are free from
material misstatements. The auditor must assess materiality in
planning the audit to ensure that sufficient audit work is
performed to detect material misstatements. Required Once the
auditor develops an assessment of materiality, can it change during
the course of the audit? Explain