The following are a list of risks to the financial report:

1. Senior management has offered large bonuses to managers to meet financial targets.

2. Analytical procedures for a manufacturer show a significant increase in both profit margins and inventory turnover days.

3. The industry in which the company operates is experiencing economic difficulties.

4. Analytical procedures for a retailer show significant decreases in both profit margins and inventory turnover days.

5. An employee responsible for cash payments did not receive a pay rise due to poor performance.

Required

For each risk identify the potential type of misstatement in the financial report and identify if the misstatement would have a pervasive effect on many or all of the assertions.