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28 During the initial stages of the audit of Xenon Company, the external auditors, Fairway CPAs have noted that the firm's senior management appear to

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28

During the initial stages of the audit of Xenon Company, the external auditors, Fairway CPAs have noted that the firm's senior management appear to have extremely aggressive sales and growth targets for the company, as well as the client having high staff turnover levels in many other key positions. Based on this information, which of the following represents an appropriate response by the auditor with respect to testing of the client's internal controls? The auditors should conduct a trend analysis using audit data analytics (ADA) and determining if the turnover trend is customary for the client. The auditors should carefully consider entity-level controls and consider assessing control risk as higher. The auditors should consult with the predecessor auditor and consider withdrawing from the engagement, as this will help preserve the auditors' reputation. The auditors should begin by examining transaction-level controls and working their way up to entity-level controls

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