Stylewize Computer Co (Stylewize) is a large computer company which operates a network of stores across Canada. The company’s year end is December 31, 2019. You are the audit senior of Prada & Co. Stylewize is a new client and you are currently planning the audit with the audit manager. You have been provided with the following planning notes from the audit partner following his meeting with the Controller. Stylewize purchases goods from a supplier in China and these goods are shipped to the company’s central warehouse in BC. The goods are usually in transit for four to six weeks and the company correctly records the goods when received. Stylewize does not perform a year-end inventory count, but carries out monthly cyclical inventory counts and any errors identified are adjusted in the inventory system for that month. During the year the company introduced a bonus plan based on sales for its salespeople. The bonus target was based on increasing the corporate sales. This has been successful and revenue has increased by 15%, especially in the last few months of the year. The level of receivables is considerably higher than last year and there are concerns about the creditworthiness of some customers. Stylewize has a policy of revaluing its land and buildings and this year has updated the valuations of all land and buildings. During the year, the directors have each been paid a significant bonus, and they have included this within wages and salaries. The directors do not want to disclose the bonus despite the fact that the bank would likely want to know about the payment.

Required:

Describe SEVEN audit risks AND explain each.