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You currently work as an auditor for an accounting and audit firm. A prospective client, a major US ground transport Company, has approached your firm, and shared their goal of expanding operations into Canada. They are looking to acquire a handful of trucking businesses that are profitable and will continue to be profitable in the future. They have hired you to examine the financial statements of a business called Speedster Freight, for the year ended December $31,2023.$ This is a first$-$time audit for the business.

In $2004,$ two brothers, Mario Speedster and Luigi Speedster entered into a ground transport business. They ship cargo across western Canada and pride themselves in being a reliable, cost$-$effective freight carrier. One reason for their success is that the two brothers have been closely involved with the business operations $-$ Mario focuses on business development, attracting and retaining customers, and Luigi oversees the day to day operations. However, competition has been fierce in the past few years, particularly with the rising costs of fuel and price$-$cutting measures to retain customers.

In the past fiscal year, Mario has taken another significant interest free loan from the business, and Luigi feels that this was unfair, thus causing a rift between the two brothers. Luigi states that Mario's style of running the business has been to "laid back" and doubts that he will be repaying the business for the loan. I

In October $2023,$ the two brothers hired a new accounting manager. Sally Peach. During one of the initial meetings with the auditors, Ms Peach mentioned that the estimates used to record depreciation for the freight truck need to be revisited. She feels that they have been under$-$depreciated for many years now. She also mentioned that the previous accounting manager was disorganized and kept poor records; She is still in the process of "figuring things out" and establishing better controls.

Identify the factors that will impact the risk of material misstatement and explain how they affect the audit. Comment on any other notable issue$($s$)$ arising from the case.

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