You are the engagement partner of an audit assignment with an entity specializing in the provision of information technology services and software. At the beginning of the financial year the company entered into a contract with the government of China and you have been discussing the implications of the contract, including the investment in necessary new technology and amounts receivable from the Chinese government.

What evidence would you look for to satisfy yourself that business risks have been considered and that the company has taken reasonable steps to reduce the risks? Would this work be useful in ascertaining that management is competent and trustworthy? Assume this is not a new client.