Question

Kingston Cooperates in the computer games industry, developing new games for sale in retail stores. Portmore Co is currently waiting for confirmation from their bank that their overdraft facility will be extended. The bank have requested a copy of the audited financial statements as soon as they are available. Montego Co has recently started selling their products overseas. Lucea Co, a manufacturer, has negotiated a contract with a new supplier for all its raw materials.

Required: For each of the scenarios above identify the business risks and state the impact, this might have on your assessment of the risk of material misstatement for the planning of the audit.

Answer 1

As Kingston Cooperates in the gaming Industry. and developing new game industry. thus business will Identify the Following Riskes.

1. Finacnial Risk: if the product is not as per upto the customers demand. then the whole finance raised will be wasted. and huge Interest paid by business.as seen already business want to Overdraft facility.

2. Competitors Risk: Market competitors can easily copy the Softwares and designs, and may be issue discount policies to attract different level of customers.

3. Legal risk also associated with new inentions. that must be regularly follw.

4. Government risk: that is associated with Policies of the Government that if That are regularly change by Government, then will be harmful for business.

5. Economic Risk: related to Economy. if the ecomony is in Boom or depression then it will effect our business also.

6. Material Risk: If the Raw material is not available, then Production will not start. then demand and supply will not match.