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Hi, the question says that the company company operates in a highly regulated industry. Is it a business risk for the company or inherent risk.
Thank youYou will learn further in P7 that business risks are in fact a lead to inherent risks for the auditor
Like, “customers are struggling to pay”
Its a business risk of liquidity pressure but it also leads to inherent risk of poor credit policies and therefore a bad debt or allowance recognition need in the Financial statements. The risk is that its not recognised and hence the debtors balance is overstated
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