Auditing

Question two Mukwa is a privately owned business that sells medical product and devices to hospitals, clinics and the public. Certain changes have occurred in Mukwa during the year undergoing the audit. The auditor needs to evaluate the effect these changes have on audit risk and procedures.. Client changes: 1. An internal audit department headed by the finance director has been established. 2. A new inventory control system has been installed that reduces the access of unauthorized parties. 3. Inexperienced accounting personnel were hired in the accounting department. 4. Excess cash was used to purchase complex derivative securities. Using the components presented in the following table, evaluate the effect that these changes have on audit risk and procedures. (10 marks) No Po Auditor Type of audit risk Possible effect on the audit plan Auditors response to reduce risk RmA - AR