Question 5 (8 marks) Bright Ltd (Bright) is a company that supplies and distributes electrical appliances. The company is an ongoing audit client of your firm. From a telephone call to the general manager of Bright prior to the commencement of this years audit, you have ascertained the following.

(a) The company has experienced considerable staff turnover in its accounts payable department, including the departure of the accounts payable manger, who resigned early in the year. This has created some delays in the processing of payments.

(b) The company plans to upgrade its general ledger reporting by acquiring a new software package. The conversion is planned for three months prior to its financial year end.

(c) During the year, the company received a visit from the Australian Taxation Office (ATO) for a desk audit. As a result of this, a number of issues were raised, but to date no assessment has been issued. The companys tax advisers are presently following up these matters

. (d) As part of its cost-cutting program, the company decided to retrench its internal audit department two month before year end.

Required:

How will each of the above matters affect your overall audit plan for the expected scope and conduct of the audit? Explain.