i. The financial controller resigned during the year and the company has yet to hire another financial controller. The accounts of the current year were prepared by the assistant accountant.

ii. Company has implemented a new bonus scheme during the year, whereby the directors would be awarded a bonus of a percentage of the profits for the current year if they could exceed the previous years profit by 25%.

Required:

i). Which component of the Audit Risk Model (ARM) would be affected, and how?

ii). Discuss how your audit plan would be affected.