1 It is February 15, 2021 and you, CPA, are an audit manager with Wilks and Rhodes, CPA's. Your audit partner Mary Wang has asked you to complete the planning section of the audit of Olanda Corporation (Olanda). Olanda has a December 31 year end. Olanda, a medium sized company, is based in Vancouver, British Columbia. Olanda buys computers, parts and related equipment and resells them at a markup to a loyal base of corporate customers. Although the market is favourable, market competition has been growing over the past few years. Despite increased competition, Olanda has maintained consistent profits from year to year due to the company's reputation for excellent customer service. Olanda's owner, Peter Fry is very involved in the majority of important operating decisions and when Peter is not available, his capable assistant Lucy Smith assumes his duties. Peter and Lucy are both compensated well. Olanda operates multiple warehouses, each carrying a mix of inventory items. In an effort to improve the company's internal controls, Peter is thinking of drafting a code of ethics and a policies and procedures manual for the accounting department. The accounting department consists of a team of loyal employees who have been with the company for many years. None of the accounting staff hold designations or have had any formal accounting training. This year, Olanda implemented an integrated computer system to manage the general ledger (GL) as well as the company's inventory, purchases and sales. The system was developed, implemented and tested by external consultants and is maintained by Olanda's IT department. Peter would like to expand Olanda's operations into the United States and applied for a $2,500,000 line of credit in November of 2021. The bank will decide whether or not to approve the loan once it has reviewed Olanda's 2020 financial statements. If the loan is approved, the bank will require Olanda to maintain a current ratio of 2.5:1. Assume that audit risk for this engagement is low. Required: a) Assess inherent risk at the overall financial statement level. Conclude on inherent risk. Is it low, medium or high? b) Assess control risk at the overall financial statement level. Conclude on control risk. Is it low, medium or high? c) Conclude on detection risk