Raj Private Limited is engaged in the business of retail and has its retail outlets concentrated towards Northern India. Currently, the company has 59 outlets and the plan of the management is to take this to at least 100 over the next 2 years.

The company is audited by Raj & Associates, a firm of Chartered Accountants, who have been operating for over 20 years, however, they don't have much experience in the retail sector. Because of this fact the audit team decided to plan efficiently for the audit of the financial statements of the company for the year ended 31 March 2020, being their first year of audit.

During the course of risk assessment by the auditors, it was discussed that the company is operating in an industry where the operations are not very complicated and mostly the processes are known to all. Considering the same they decided that assessment of inherent risk should not be done for this company as that would be inefficient.

However, the auditors will take due care of the control risks. The same assessment was deliberated upon and after lot of discussions it was finalized like this.In the given situation, please advise which one of the following would be correct.

(a) The assessment of audit team is correct.

(b) The assessment of audit team is wrong considering the fact that this is a private company wherein such assessment is not possible.

(c)The assessment of audit team is wrong for this company.

(d) The assessment of audit team is correct considering the fact that this has been thoroughly discussed.





















Ans: (c)The assessment of audit team is wrong for this company.





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