1. From the listing provided below, identify five conditions/events that may indicate the existence of risks of material misstatements.

List of conditions/events:

a) An organization that has been operating with consistent profits.

b) A board of directors with diverse expertise.

c) Operations that are subject to a high degree of complex regulation.

d) Changes in the industry in which the entity operates.

e) Use of a standardized accounting software.

f) Developing or offering new products or services, or moving into new lines of business.

g) Expanding into new locations.

h) Significant transactions with related parties.

i) Business that manufactures one standardized product.

j) Domestic operations that focuses on a particular geographic location.

2. From the listing provided below, identify four conditions/events that may indicate the existence of risks of material misstatements.

List of conditions/events:

a) Executive team with many years of service.

b) Application of new accounting pronouncements.

c) Accounting measurements that involve complex processes.

d) Minimal transactions require estimates.

e) Events or transactions that involve significant measurement uncertainty, including accounting estimates.

f) No related party transactions.

g) Long history of legal compliance.

h) Pending litigation and contingent liabilities, for example, sales warranties, financial guarantees and environmental remediation.