Question

Scenario 5

Jupiter Mining Ore Limited is a major mining and exploration firm with operations in multiple galaxies. The company is looking to further expand its operations those solely within its core operations. The company’s total assets exceed $100 billion, liabilities of $45 billion, and annual sales close to $200 billion. The preferred auditor is Bad Eyesight Auditors.

Required: Consider the following scenarios independently to determine the type of risk, level of risk and extent of audit work that may be necessary:

Mining operations require major capital expenditure; thus, there are major barriers to entry. Hence, many mining operations are mature firms with constant relationships. Sales transactions require substantial estimations and involve the use of complex financial instruments. The great number and magnitude of sales by Jupiter Mining Ore Limited are a further complicating factor.

• Type of Risk

• Level of Risk

• Expected Level of Audit Work

• Justification

Answer 1

barriers to entry are the fators that prevent a startup from enterting a particulat market. in this case the main risk is the level of competion. the great number and magnitude of sales by jupiter mining Ore limited are further complicating fator. The llevel of risk is very high because the market is dominating by the jupiter mining ore limited .

barriers to entry act as deterrent against new competitiors. they serve as defensive mechanism that imposes a cost element to new entrants, which incumbents do not have to bear. startups need to understand any barriersto entry for their business and market.