9.37 (OBJECTIVES - entrisk, acceptable events. In each of dent variables an not determine from Control risk CTIVES 9-5, 9-9) Using the audit risk model, state the effect on control risk, inher- eptable audit risk, and planned evidence for each of the following independent each of the events a. through j., circle one letter for each of the three indepen- bles and planned evidence: I = increase, D = decrease, N = no effect, and C = can- nine from the information provided. the client's management materially decreased long-term contractual debt: Control risk IDNC IDNC Acceptable audit risk IDNC Inherent risk IDNC Planned evidence Planned evi IDNC The client changed from a privately held company to a publicly held company: IDNC Acceptable audit risk IDNC Inherent risk IDNC Planned evidence IDNC The auditor decided to set assessed control risk at the maximum (it was previously assessed below the maximum): Control risk IDNC Acceptable audit risk IDNC Inherent risk IDNC Planned evidence IDNC d. The client acquired a new subsidiary located in Italy: Control risk IDNC Acceptable audit risk IDNC Inherent risk IDNC Planned evidence IDNC e. The account balance increased materially from the preceding year without apparent reason: WIDNC Acceptable audit risk IDNC Inherent risk IDNC Planned evidence IDNC 1. You determined through the planning phase that working capital, debt-to-equity ratio, and other indicators of financial condition improved during the past year: Control risk IDNC Acceptable audit risk IDNC Inherent risk IDNC Planned evidence IDNC & This is the second year of the engagement, and there were few misstatements found in the previous year's audit. The auditor also decided to increase reliance on internal control: IDNC Web page during er order informa- Acceptable audit risk IDNC. Control risk Planned evidence IDNC IDNC Inherent risk h. The client began selling products online to customers through its Web the vear under audit. The online customer ordering process is not integrated company's accounting system. Client sales staff print out customer order info tion and enter that data into the sales accounting system: Acceptable audit risk IDNC Control risk IDNC Inherent risk IDNC Planned evidence IDNC i. There has been a change in several key management personnel. You believe that management is somewhat lacking in personal integrity compared with the previous management. You believe it is still appropriate to do the audit: Control risk IDNC Acceptable audit risk IDNC Inherent risk IDNC Planned evidence IDNC j. In discussions with management, you conclude that management is planning to sell the business in the next few months. Because of the planned changes, several key accounting personnel quit several months ago for alternative employment. You also observe that the gross margin percent has significantly increased compared with that of the preceding year: Control risk IDNC Inherent risk Acceptable audit risk IDNC IDNC Planned evidence IDNC