Assessing Fraud Risk. According to the professional auditing standards, anaudit team should ordinarily presume that revenue recognition is a fraud risk. a. From the following list, select fraud risks that are present based on your understanding of the case. You may select as many risks as apply.

a.The company set aggressive sales targets for its new product line.unanswered

b. Upper management emphasizes internal controls and conservative business practices.unanswered

c. The companys new product has been overly successful in its first year, with higher than expected sales volumes.unanswered

d. The company has a history of difficulty collecting accounts receivables from customers.unanswered

e.A new bonus plan was recently established to provide incentives that focus on revenue earned.unanswered

f.The company operates in a highly competitive industry.unanswered

g.The company has a new CEO who was hired directly from a competitor.unanswered

b. Which of the following accounts and assertions would be considered higher risk based on the risks identified in the case. You may select as many accounts and assertions as apply.

a. Occurrence of Revenueunanswered

b. Revenue Cutoffunanswered

c .Completeness of Revenueunanswered

d. Existence of Accounts Receivableunanswered

e. Completeness of Accounts Payableunanswered

c. What special audit considerations would you propose in response to the significant risks identified above. Select as many responses as you believe are appropriate.

a. Perform more tests of client internal records and fewer external confirmations.unanswered

b. Increase extent of accounts receivable confirmations.unanswered

c. Perform extensive sales cutoff tests.unanswered

d. Increase interim testing and reduce year end testing.unanswered

e. Perform inventory counts more often during the year.