The owner/manager of a privately-held company also owns 3 other companies. The entities could all be run as one entity, but they engage extensively in related-party transactions to minimise the overall tax burden for the owner/manager.

(a)State the effect on Inherent Risk and/or Control Risk. (1marks)

b)Provide an explanation for your answer in part (a).

(c)Briefly discuss how the situation will affect your overall plan for the expected scope and conduct of the audit.