Zoot Ltd is a national fashion retail chain with stores located throughout New Zealand. The company specialises in expensive women’s summer wear. Garments are designed in New Zealand and manufactured in China, using European-sourced fabrics. The availability of competitor products on low-price internet shopping sites, combined with a strong New Zealand dollar, have resulted in several fashion companies closing down. In preparation for the current year audit, you have ascertained the following information from a phone call to the financial manager: 1. There has been considerable staff turnover in the accounts payable department, including the resignation of the accounts payable manager early in the year. This has caused some delays in processing payments. 2. The company will be switching to a new accounting software system two months before year end. Required: a) Identify and explain three industry specific factors that are important to properly understanding Zoot Ltd and its environment and assessing risk. b) Briefly explain how matters 1 and 2 above will affect your overall planning of the audit.
