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Based on the background research and analytical procedures performed in Stages a-c, summarize your observations about the company’s business, including your assessment of the client’s business risk. Prepare a broad audit plan:
a. Which transaction cycles are the high-risk areas?
b. Identify at least three risk areas in the audit of this company and describe: (1) the risk; (2) why you have assessed this as a specific risk; and (3) how you would perform the audit to address this risk.
c. If management faced tremendous pressure regarding the entity’s financial performance, what opportunities might exist for them to engage in fraudulent financial reporting?
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