Scenario 5

Jupiter Mining Ore Limited is a major mining and exploration firm with operations in multiple galaxies. The company is looking to further expand its operations those solely within its core operations. The companys total assets exceed $100 billion, liabilities of $45 billion, and annual sales close to $200 billion. The preferred auditor is Bad Eyesight Auditors.

Required: Consider the following scenarios independently to determine the type of risk, level of risk and extent of audit work that may be necessary:

Mining operations require major capital expenditure; thus, there are major barriers to entry. Hence, many mining operations are mature firms with constant relationships. Sales transactions require substantial estimations and involve the use of complex financial instruments. The great number and magnitude of sales by Jupiter Mining Ore Limited are a further complicating factor.

• Type of Risk

• Level of Risk

• Expected Level of Audit Work

• Justification