Pedro is the engagement partner on the audit of Lynch Brothers, a public company selling small kitchen appliances. The appliances are made in China and imported and sold to retail outlets by Lynch Brothers. Lynch Brothers has a small internal audit team that was established after the business was accused of "channel stuffing" five years ago. The internal audit team reports directly to the audit committee, which has four independent directors.
After the problems of five years ago, the entire senior management team changed, and the company became extremely committed to promoting good corporate ethics. Remuneration packages for all senior staff include incentive payments for achieving targets based on governance indicators, staff satisfaction scores, peer reviews, and performance appraisals, as well as sales targets.
Pedro has audited Lynch Brothers for four years and has been impressed throughout this time with both the quality of the company's accounts and the internal audit team, which is highly qualified and effective.
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What approach would you recommend Pedro take to the audit of Lynch Brothers' income statement accounts? Why?