Required: a) Assess and conclude on inherent risk at the overall financial statement level (low, medium, or high). b) Assess control risk at the overall financial statement level. Conclude on control risk. Is it low, medium or high? c) Conclude on risk at the OFSL and detection risk. d) Assess overall planning materiality. e) Assess overall performance materiality. f) Assess specific materiality. g) Assess specific performance materiality

You CPA are the senior auditor with Pago, Cambio, Factura (PCF), a local auditing firm. You were recently placed in charge of the audit of a new client, Valentina, a retailer of electronic equipment for the home and office. Valentina has 14 locations across Western Canada. It specializes in providing customers with the latest technology in home entertainment electronics such as televisions and PVR players. It also offers leading edge specialized office technology, including high performance computers. The business was started 15 years ago in Alberta by two sisters who are still the only owners of the company. The sisters are both involved in the day-to-day operations of the company. They paid themselves a management bonus in 2020 of $60,000. The business has grown as a result of excellent advertising, good locations, and reasonable prices based on the ability of the company to buy in volume. Each store has a high degree of security such as electronic bars and video surveillance. The accounting for the stores is all electronically performed. The sales tills are downloaded every day to the main office in Calgary which performs the accounting for all of the stores. The main office also has the warehouse from which all inventory is shipped to the stores. Business has been relatively stable but the company does have pressure from American competitors moving into Canada as well as another Western Canadian competitor, B&C Sound. As well, the business tends to fluctuate with the economic cycles so recent government cutbacks in B.C. have resulted in lower sales. As a result of a decrease in profits, the company requires a significant loan from a bank and the bank has requested audited financial statements. It is the first year that the financial statements have been audited. The bank intends to use the inventory as collateral for the loan. Valentina has provided you with the following financial information for the years ending December 31, 2020: December 31, 2020 ('000s) $48,900 Total assets Total revenues $124,900 Total net income before tax $23,500 Total net income after tax $15,400