Question $2(30$ marks$)$

$(30)$

Lightyear Group

Lightyear Group Holdings $($Pty$)$ Ltd $($Lightyear$)$ is the parent company of Rudy Toys $($Pty$)$ Ltd and Bells $($Pty$)$ Ltd$.$ These companies all specialise in the manufacturing of kid's toys. The parent company, Lightyear, is listed on the JSE. All companies have a February year end. Lightyear and Rudy Toys are residents of the Republic and Bells $($Pty$)$ Ltd is a resident of the United Kingdom, and it uses the British Pound as its functional currency. The companies often transact with each other in terms of selling inventory and providing management services. There has been increased competition in the sector, resulting in a loss being incurred more than in previous years.

A&A has been the auditors of the Lightyear group since its inception in $2001.$ With the recent scandals involving audit firms, the independent non$-$executive directors of the group have raised concerns about the duration of the relationship between the auditors and the Lightyear group. They have requested to the Board that the group consider changing auditors after the completion of the audit of the financial year ended $28$ February $2024.$

Required

a$)$ Discuss the advantages to the quality of the external audit that should be considered if the Board decided to change auditors as requested by the independent non$-$executive directors of the group.

$(20)$

b$)$ Discuss your assessment of the risk of material misstatement at overall financial statement level for the $2024$ audit of the consolidated financial statements of Lightyear group. $(10)$