For the current year, ABC Company, a public company, has been experiencing poor performance. Industry analysts have been issuing negative reports and the company's stock price has been steadily declining. Further, they implemented a new ERP system and a number of key employees left. ABC is a recurring client and in the prior year it was noted that controls were operating effectively.

123 Corp (another client) is a private company, has been performing well, and has not historically had misstatements. As an auditpartner for theseclients, consider the following -

1. How would you assess the audit risk for both clients?
2. When would take a reliance vs substantive approach? (Remember private vs public and the impact of risk of control and substantive testing)