1 2 3 4 1. During Year 2, the company instituted a new procedure whereby the internal audit function distributes payroll checks to employees for Decreases control risk selected payroll cycles. 2. In Year 2, the auditor noted that the Select an option below company's newly hired purchasing agent was O Decreases control risk Deci not obtaining competitive bids for all major Decreases detection risk purchase requisitions. 3. Early in Year 2, the company extended its Decreases inherent risk existing warranty program on some of its major incre products in an effort to increase revenue. Increases control risk 4. At the beginning of Year 2, the company Increases detection risk changed insurance carriers for the fire insurance Deco on its building Increases inherent risk 5. During Year 2, the company repaid a floating- interest-rate loan on which it had purchased a Deci RESET derivative as a hedge. The hedge was also sold. CANCEL ACCEPT 1. During Year 2, the company instituted a new procedure whereby the internal audit function Decreases control risk distributes payroll checks to employees for selected payroll cycles 2. In Year 2, the auditor noted that the company's newly hired purchasing agent was Decreases detection risk not obtaining competitive bids for all major purchase requisitions. 3. Early in Year 2, the company extended its existing warranty program on some of its major increases inherent risk products in an effort to increase revenue. 4. At the beginning of Year 2, the company changed insurance carriers for the fire insurance Decreases inherent risk on its building 5. During Year 2, the company repaid a floating- interest-rate loan on which it had purchased a Decreases inherent risk derivative as a hedge. The hedge was also sold. E Scroll down to complete all parts of this task. Bestwood Furniture, Inc., a nonissuer that produces wood furniture, is undergoing a Year 2 audit. The situations in the table below describe changes Bestwood made during Year 2 that may or may not contribute to audit risk. For each situation, select from the option list provided the effect, if any, that the situation has on a specific element of audit risk for the Year 2 audit. A choice may be used once, more than once, or not at all. Situation Effect on component of audit risk 1. During Year 2, the company instituted a new procedure whereby the internal audit function Decreases control risk distributes payroll checks to employees for selected payroll cycles. 2. In Year 2, the auditor noted that the company's newly hired purchasing agent was Decreases detection risk not obtaining competitive bids for all major purchase requisitions. 3. Early in Year 2, the company extended its existing warranty program on some of its major increases inherent risk
