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Your Firm Has Been Appointed as the Auditor of Bush

question 37

Essay

Your firm has been appointed as the auditor of Bush Mining Inc. (BMI), a company that runs small mining operations in remote areas of northern Canada, primarily in surface mines. You have been assigned the job of senior auditor for BMI.
BMI's operations are subject to provincial and federal laws and regulations. These laws and regulations have become stricter in recent years and some of BMI's older mines may be in violation of environmental laws. Surface mining produces tailings (toxic wastes that are dangerous to animal and plant life). These tailings are either further processed and buried or retained in tailings ponds. BMI is required to restore the mining property to a safe condition after a mine is exhausted. BMI has programs in place to monitor and control pollutants that are released to the air and to local waterways.
Required:
A) What factors would affect the client business risk of BMI? Based upon your assessment of BMI's client business risk, would you adjust audit risk? Why or why not?
B) What is your preliminary assessment of audit risk? Justify your answer.

Definitions:

Disturbed Personal Identity

A psychological condition where an individual has an inconsistent or conflicted sense of self.

Dissociative Identity Disorder

A severe form of dissociation, a mental illness that involves the presence of two or more distinct and enduring personality states.

PTSD

Post-Traumatic Stress Disorder (PTSD) is a mental health condition triggered by experiencing or witnessing a terrifying event, characterized by severe anxiety, flashbacks, nightmares, and uncontrollable thoughts about the event.

Hypervigilance

An increased level of sensitivity in the senses paired with a heightened intensity of actions aimed at identifying potential threats.