Question $1(3$ points$)$

Denise Eriksson is preparing a report for the engagement partner of an existing

client, British Motor Parts Ltd$.($BMP$),$ an importer of automobile parts for classic

British cars. Denise has been investigating certain aspects of BMP$\text{'}$s business given

the change in economic conditions over the past $12$ months. She has found that

BMP$\text{'}$s business, which experienced rapid growth over its first two years in operation,

has slowed significantly during the past year. Initially, sales of auto parts were

boosted by good economic conditions and solid employment growth, coupled with

lower borrowing rates. Consumers in the "baby boomer" category had disposable

income to indulge in the restoration and investment in classic British automobiles.

However, Denise has found that the sales of auto parts have slowed significantly and

that all importers of these products, not just BMP$,$ are being adversely affected. The

onset of an economic recession has restricted employment growth, and those people

who still have jobs are less certain of continued employment. In addition, a

slowdown in the world economy has reduced discretionary spending on non

essentials. Denise has also discovered that, due to the global slowdown, BMP$\text{'}$s bank

has tightened up on lending restrictions, and increased the cost of borrowing.

Required

a$)$Identify the issues that potentially have an impact on the audit of BMP$.$

b$)$Explain how each issue affects the audit plan by identifying the risks

c$)$Identify the financial statement accounts that require closer examination.