You are an assurance services senior and your client is Antique Collectibles Pty Ltd (AC), a small company that specialises in buying and selling antique Australian-made bush furniture. AC purchases pieces at auction, cleans and repairs them, then sells them to the general public. This is the first year that your firm has conducted ACs audit. AC is a small owner-managed business that does not have a complex organizational structure or an advanced information system. Due to the size of the entity, there is very little separation of duties at AC, and most employees at AC are related to the owner. AC tends to focus purely on sales and market share, and the owner has admitted to that, at times, he has treated the finance department as a bit of an afterthought. He has also admitted that he hasnt paid too much attention to the controls at AC, as he trusts the staff members, due to their relationships with him.

1. Describe the responsibilities of the auditor when taking on a new client such as AC 2. Describe the additional factors that need to be considered in relation to audit planning by the auditor if the new client has not been audited previously 3. Describe whether the auditor will take a substantive approach or a combined tests of controls and substantive approach to the audit. Explain your answer. 4. Assume that the audit has been completed. What issues would you as the auditor communicate with the client about in relation to the information identified above?