In order to comply with International Audit Standards (New Zealand), auditors must understand the client’s industry and business (ISA (NZ) 200, 300 and 315) and the impact of these risks on the planning and conduct of the audit (ISA (NZ) 330).Required:By researching media and web-based sources for one of the following industries: (a) perform a business and entity-environment risk analysis to identify issues that are relevant to the planning of an external audit assignment, for a client in one of the following industries:(i) Hotel/hospitality;(ii) Health/age care;(iii) Airlines (15 marks)(b) Select one company from your selected industry and referring to sources accessed for (a) above and the company’s recent annual and interim reports and press releases provide a preliminary planning report that:(i) analyses the specific risks associated with the company that would impact on the conduct of your audit; (15 marks)(ii) identifies the specific areas of your audit of the company’s financial statements that would be most affected by the results of your risk analysis. (15 marks)QUESTION 2: Professional Judgement and Ethics 17 MARKSA. Professional and Ethical Standards (PES) 1 requires an auditor to Identify threats to compliance with fundamental ethical principles and to evaluate the significance of the threats identified. In each of the following independent scenarios:i. briefly discuss the ethical principle(s) that the auditor must consider (with references to the Ethical and Professional Standards); andii. outline the likely outcome or resolution in harmony with these Standards.Scenarios:1. Tracy has been the partner in charge of the audit of Mighty River Projects Ltd (MRP) for some years. In the last year she has taken a 30% interest in a joint venture in which the Chief Financial Officer of MRP has a 25% interest. The joint venture is audited by a separate audit firm. (4 marks)2. For one of their audit clients, Care, Skill and Co have been requested to undertake a risk assessment assignment and to prepare a report focusing on economic and environmental risks. The client intends to use this to establish a risk management function within their corporate governance structure. (4 marks)3. Peter is an audit partner in charge of engagements for Clients A and B. During the audit of Client A, Peter becomes aware of information that will materially affect the audit of Client B – namely that Client A is unlikely to be able to pay its debts to B. (4 marks)B. In your own words, explain the perceived weakness(es) in the application of the international ethical standards (as embodied in New Zealand’s PES 1 for assurance providers) that has led to the Institute of Chartered Accountants of Scotland to propose an additional standard on ‘Moral Courage’. (5 marks)QUESTION 3: Audit Evidence 12 MARKSYour audit client, Speedy Data Ltd (SDL), a major producer of external computer storage devices, has allegedly inflated its reported profits and inventory through a number of questionable accounting techniques. Senior executives are on performance contracts that may have encouraged earnings management techniques. You believe the techniques included:(a) a large shipment invoiced close to the year end to a major customer; the customer returned the goods after the year end and the goods were then returned to inventory and credited to the customer’s account;(b) devices returned by customers that were routinely recorded as usable inventory; a significant proportion were then re-sold before being returned as faulty;(c) SDL established a number of just-in-time warehouses as back-up supply for regular customers; as the devices held in these warehouses would be on-shipped to specific customers they were billed as sales on delivery to the SDL warehouses.Required For each of these procedures, identify the specific audit objectives and appropriate audit evidence that ought to have been obtained by the auditor as part of a well-planned risk-based audit. Provide your answer in the following format.