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AP4.2 (LO 1) is preparing a report for the engagement partner of an existin che and other low-powered motorcy the change in economic Understanding the
AP4.2 (LO 1) is preparing a report for the engagement partner of an existin che and other low-powered motorcy the change in economic Understanding the client and its risks-risk assessment Ivy Brown ven conditions over the past 12 months. She has found that Scooter's business, which enced rapid growth over its first five years in operation, has slowed significantly during the last Moderate nt, Scooter Inc., an importer of scooters cles. Ivy has been investigating certain aspects of Scooter's business gi year. Initially, sales of scooters were boosted by good economic conditions and solid employment growth, upled with rising gas prices. Consumers needed transportation to get to work and the high gas prices made the relatively cheap running costs of scooters seem very attractive. In addition, the low purchase price of a small motorcycle or scooter, at between $3,000 and $8,000, meant that almost anyone who had co a job could obtain a loan to buy one. However, Ivy has found that the sales of small motorcycles and scooters have slowed significantly and all importers of these products, not just Scooter, are being adversely affected. The onset of an eco- nomic recession has restricted employment growth and those people who still have jobs are less certain of continued employment. In addition, the slowdown in the world economy has made gas prices fall, further reducing demand for this type of economical transportation. Ivy has also discovered that, due to the global financial crisis, the finance company used by Scooter's customers to finance the purchase of scooters and motor cycles has announced that it will not be continuing to provide loans for any type of vehicle with a purchase price of less than $10,000 Required a. Identify the issues that potentially impact the audit of Scooter Inc uate how each issue affects the risk assessment by (1) identifying the risks and (2) identifying the financial statement accounts that require closer examination
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