You are employed by Twumasi and Co, a firm of certified accountants. KPTP is a new audit client recently taken on by the firm. KPTP is an importer and wholesaler of specialist computer hardware. During the year the company's chief accountant resigned and in the three months leading up to the appointment of her replacement, no checking had been performed on the monthly reconciliations of the bank account in the receivables and payables ledgers.

Required:

a)From the scenario, identify examples of inherent risk and control risk, clearly explaining the nature of any misstatements that might arise in the financial statements. (4 marks)

b)From the scenario, identify any potential detection risk, and explain how the firm could minimize this risk. (4 marks)

c)Auditors have various duties to perform in their role as auditors, for example, to assess the truth and fairness of the financial statements.

Required: Identify six (6) rights that enable auditors to carry out their duties. (3 marks)

d)You are about to review the internal control system of your client company.

Identify four (4) factors that would determine the nature, timing and extent of controls that you would expect.