For each scenario, identify possible audit engagement acceptance$/$continuance risk$($s$)($A$$F$).$

Audit engagement acceptance$/$continuance risk$($s$)$:

A$.$ Firm$$s ability to audit client $($scope limitation$)$

B$.$ Firm$$s reputation risk

C$.$ Non$-$compliance with ethical standards

D$.$ Additional duty of care$/$increased legal exposure

E$.$ Auditor$$s lack of sufficient expertise in relation to the industry

F$.$ Integrity of management

Note: Each scenario will have one or multiple risks that need to be considered.

Scenario

Risk$($s$)$

Your firm has been approached to conduct a financial statement audit by Lilli Corp. The CFO has informed you it has a December $31$st year$-$end and they require the audit report by March $15$th$.$ The firm$$s staff are working sixty hours a week during that time of year. Due to a shortage of junior and senior auditors, it is very difficult to recruit staff.

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