Based upon the case facts, indicate whether the type of control risk?pervasive risk (impacts entire financial statements) or a risk at the assertion level (if so, which account and assertions are affected)?and the impact on control risk (whether the factor increases or decreases control risk).

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Scenarios Type of Control Risk Impact on Control Risk There have been a number of discrepancies in the company's cash balance. One of the managers suspects that Dominic (the CFO's cousin) may be removing cash on Friday afternoons. The manager, however, is afraid of "getting in trouble" with the CFO if she confronts Dominic about this issue. The company's controller is a very detailed and rules-oriented individual. Last month, she fired an employee from the accounting department who did not complete bank reconciliations on time. The new head of purchasing has added six new vendors to the approved vendor list within the first two months of employment. Since the vendors offer products and services at much lower prices com- pared to other vendors, the CFO did not bother with the usual new vendor verification process. Scenarios Type of Control Risk Impact on Control Risk A number of warehouse staff called in sick on the day of the annual inventory count. The warehouse manager could have postponed the count to another day, but decided to go ahead with the count and instructed her staff to only check initial count results (they were to double count if they had any time left at the end of the day). To complete the financial statements on time, the A/R manager worked all night to estimate the allow- ance for doubtful accounts. The manager conducted a thorough review of each customer's credit balance. The allowance estimate was thoroughly reviewed by the controller, who noticed and corrected a couple of minor errors. Over the past several years, the external auditor of Nicolas Inc., a manufacturer of children's toys, in its management letter expressed concerns about the company's weak internal controls. In response and to address some of the external auditor's concerns, last year Nicolas Inc. established an internal audit department.