Audit planning, risk factors and audit strategy

You are an Audit Senior with Au Dit & Co, a medium-sized audit firm in Sunway. You are assigned as the senior-in-charge of the audit of Jasa Packaging Sdn Bhd, an established plastic injection moulding manufacturer that produces the non-biodegradable white polystyrene (PS) foam boxes for food takeaway and other PS non-food containers. Their financial year-end is 31 December 2021 and you are commencing your audit planning and kickstarted with a meeting with the client last week.

Jasa has been running into losses in the past three years due to the ban of the popular white PS foam boxes for food takeaway in Malaysia. As a result, the business is affected and they have been slow in investing in new production lines producing polypropylene (PP) food and non-food packaging containers. The PP production lines are supposed to commence this year.

During yesterday meeting with Jasas CFO, you were informed that the commissioning will be delayed due to the Covid-19 pandemic and their chief operating officer (COO) and few long-standing senior operations staff have left Jasa en bloc to join their main competitor, Big Brother Packaging Sdn Bhd (BB) that are in the forefront in the business of PP plastic injecting moulding producing the PP food packaging containers which are more eco-friendly that replaces the banned PS food packaging. He also mentioned that some of his accounts and administration staff have also joined BB.

Required

(a) Explain how are you going to plan your audit of Jasa that enable you to conduct an effective audit in an efficient and timely manner.

b) What should you do as the risk factors above indicate that the going concern assumption is at risk?

(c) Based on the above, what is your overall audit strategy for the audit of Jasa Packaging Sdn Bhd for the financial year ended 31 December 2021?