Your firm Professional Partners (PP) is a mid-sized accounting practice with about 350 staff and offices in Perth and Melbourne. PP has specialised in small- and mid-capitalisation firms operating in the extractive industries, including companies searching for minable deposits, companies engaging in mining, and companies providing associated services (such as geological and engineering consultants, mining software services, health and safety services etc.).

PP has built a very successful practice but revenue growth has been low in the past three years. At a recent partners meeting it was agreed that in order to restart growth, PP needs to target bigger firms. In anticipation of attracting larger firms with international operations, PP has already identified firms that it believes could undertake work on its behalf in Indonesia (The Jakarta Partnership), Brazil (Contadores Extraordinários), and South Africa (Dlamini, Nkosi, and Ndlovu Partners).

In order to progress this ambition, teams are being formed across the practice to perform an initial assessment of prospective targets.

Each team is required to submit to the partners a report on their target, including an assessment of business risks, inherent risks additional to those identified by the incumbent auditor and an overall recommendation as to the suitability of the firm as an audit client. 

 

The company is ALUMINA LIMITED. 

 

Question:

1. What are the inherent risk

2. An overall recommendation as to the suitability of the firm as an audit client.