A commercial furniture wholesaler reserves for its allowance for douhtil accounts based on standard reserve percentages supported by historical collection experience. [Note that this example does not contemplate the need for specific reserves.) Management uses the same process for estimating the allowance for doubtful accounts {the \"reserve'1}, as it did in the prior "year- As part of its risk assessment procedures. the engagement team identied the following ri: of material misstatement related to the valuation assertion: I The entit},r may.r not appropriatelyr update its reserve pnolic},F (including updates to reserve percentages) for changes in circumstances- Note that ne engagement team ma},r have identied additional risks of material misstatement related to the valuation assertion identied as part of its risk assessment procedures; however: this example focuses on this specic risk of material misstatement for illustrative purposes. In addition, this risk was not identied as a aud risk