This question is from auditing and assurance subject

Question 6 20 Points Loans on go Pty Ltd provide small and medium-sized loans to clients, which includes personal, car and business loans. It has been operating for more than 20 years and run throughout its life by Maryann Lyons. Maryann has been the public face of the finance company, appearing in most of the television and radio advertisements, and developing a reputation as a friend of the 'ordinary person' who has been mistreated by the large finance companies and banks. Loans on go's major revenue stream is generated by obtaining large amounts on the wholesale money market and lending in small amounts to retail customers. Margins are tight and the business is run as a 'no frills' service. Offices are modestly furnished and the mobile lenders drive small, basic cars when visiting clients. The company has prided itself on full disclosures to its clients and services are explained in writing before loans are finalised. However, although full disclosures are made, the clients who do not read the documents carefully can be surprised by the high exit charges when they wish to make early repayments or transfer their business elsewhere. In the last few years, profit margins are extremely tight as a result of which business has resorted to cost cutting. For selling loans, the company makes use of mobile lenders who visit the clients rather than client coming to the office premises. The mobile lenders are paid on commission basis; they earn more if they write more loans. They are also encouraged to sell credit cards to any person seeking a personal loan. Loans on go receive a commission payment from the credit card companies when it sells a new card and also a small percentage of the interest charges paid by the clients on the credit card. Required: a) How does Loans on go Pty Ltd generate its revenue? Explain. b) What are the inherent and control risks revenue of Loans on go? What type of misstatements would be most likely for revenue? Explain. c) Based on risk assessment related to inherent and control risk, what audit strategy is likely to be adopted for the audit of revenue for Loans on go Pty Ltd. (4+8+8 =20 marks)