Assume that you are the auditor of Crazy Eddie and it is now the middle of the year 1987. Prepare an audit plan (excluding audit programs) for the coming audit engagement (for the year ended 31 March 1988) based solely on the information given in the case.

As a minimum, you should include the following:

i An assessment of the overall risks of material misstatement. Identify and discuss five (5) individual inherent and/ or control risks. Compute relevant ratios (maximum 6) and use analytical procedures to identify additional risks for the company. Identify and discuss one fraud risk.

ii Identify and discuss one ethical issue. iii Determine and justify the dollar amount of materiality for planning purposes. iv Determine and justify the audit strategy chosen. v Include at least one other piece of information that you think is necessary for inclusion in the audit plan.