In researching a potential new audit client,you determine that the business operates in a highly competitive industry,with low barriers to entry and very short product life cycles.What audit planning factors will this information help you to assess?
A)Audit risk
B)Auditor's risk from taking the engagement.
C)Client business risk
D)An acceptable level of Information risk.

Question

Quizplus · Accepted Answer

This information will help in assessing the client's business risk as the highly competitive industry with low barriers to entry and short product life cycles may affect the client's financial position, financial performance, and cash flow. The risk of losing customers to competitors and the need for continuous innovation may increase the chances of business failure. Therefore, it is important to assess the client's ability to remain competitive and profitable in this environment. This will help in determining the extent of audit procedures required to identify and assess the risks of material misstatement in the financial statements.

In Researching a Potential New Audit Client,you Determine That the Business