Identify four areas of inherent risk that might affect your audit planning. Would you say these are high risks or low? _ Risk of company accounting management.
The Company doesn’t have it owned accounting department. They have been using an accounting service for almost 3 years, as well as, working with an accountant in Seoul. No information about the accountant in Seoul’s competency, only 1 person manages all account recording the company’s manufactory isn’t enough; especially, this is the manufacturing business where Inventory is one of important assets. _ Transportation Risk.
The manufactory of the company is in Seoul whereas its warehouse is in Vancouver. Transportation of goods is carried out by sea, which also gives rise to a number of risk factors associated with transportation of goods. Sea transport in Korea doesn’t manage well which results in recently Sewol ferry disaster. Risks to the shipping inventory can occur at sea (worse weather) and at ports, which are key nodes within the supply chain for unloading and loading goods (lost or damage goods) _ Bike industry developments risk
The company is very optimistic with the ideal that its sale will continue increasing. Kay has her owned reasons for it. However, nothing can guarantee that bike industry will keep developing. Canada has no bike culture. Road barely has separated bike lanes. Also, Bicycle sales in Canada regain footing and continue to rise since 2013 (Canadian Cycling Magazine), this may attract manufacturing companies which want to expand their business interest in the same market. More competitors may have to reduce price. On 18 October 2013, Comprehensive Economic and Trade Agreement (CETA) between Canada and European Union had concluded creates a huge opportunity for the company to export its products to European Union – this can be a potential market for the company (Germany, France). On the other hand, the company may also have a lot of challenging (numerous new competitors who...
Please join StudyMode to read the full document