b) Bayport Finance services provides small and medium-sized personal loans to clients. It has been operating...

 

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b) Bayport Finance services provides small and medium-sized personal loans to clients. It has been operating for more than 10 years and has always been run by Mr Zimba. Zimba has been the public face of the Bayport finance company, appearing in most of its television and radio advertisements. Bayport's major revenue stream is generated by obtaining large amounts from commercial banks and lending in small amounts to retail customers. Margins are tight, and the business is run on a cost control basis. Offices are modestly fumished, loan officers have been employed as mobile lenders to service the clients. These loan Officers drive small, basic cars when visiting clients. Bayport prides itself on full disclosure to its clients, and all fees and services are explained in writing to clients before loans are finalized. However, although full disclosure is made, clients who do not read the documents closely can be surprised by the high exit charges when they wish to make early repayments or transfer their business elsewhere. Bayport's mobile loan officers are paid on a commission basis. They earn more when they write more loans. For example, they are encouraged to sell credit cards to any person seeking a personal loan. Bayport receives a commission payment from the credit-card companies when it sells a new card, and Bayport also receives a small percentage of the interest charges paid by clients on the credit card. Required Analyze the inherent and control risks for Bayport that the auditor will assess and explain the effect the risk on the financial statement, the audit risk and how the auditor will reduce the Audit risk. Present you answer in the tabular format like this one below (20 marks) How of Risk Effect on Audit risk to Type risk(inherent or control) Bayport reduce the audit risk financial statement b) Bayport Finance services provides small and medium-sized personal loans to clients. It has been operating for more than 10 years and has always been run by Mr Zimba. Zimba has been the public face of the Bayport finance company, appearing in most of its television and radio advertisements. Bayport's major revenue stream is generated by obtaining large amounts from commercial banks and lending in small amounts to retail customers. Margins are tight, and the business is run on a cost control basis. Offices are modestly fumished, loan officers have been employed as mobile lenders to service the clients. These loan Officers drive small, basic cars when visiting clients. Bayport prides itself on full disclosure to its clients, and all fees and services are explained in writing to clients before loans are finalized. However, although full disclosure is made, clients who do not read the documents closely can be surprised by the high exit charges when they wish to make early repayments or transfer their business elsewhere. Bayport's mobile loan officers are paid on a commission basis. They earn more when they write more loans. For example, they are encouraged to sell credit cards to any person seeking a personal loan. Bayport receives a commission payment from the credit-card companies when it sells a new card, and Bayport also receives a small percentage of the interest charges paid by clients on the credit card. Required Analyze the inherent and control risks for Bayport that the auditor will assess and explain the effect the risk on the financial statement, the audit risk and how the auditor will reduce the Audit risk. Present you answer in the tabular format like this one below (20 marks) How of Risk Effect on Audit risk to Type risk(inherent or control) Bayport reduce the audit risk financial statement

Answer rating: 100% (QA)

query examine inherent and manage risks for Bayport the effect of chance on economic announcement au... View the full answer