Assume you are engaged to ABC Corp. They are privately held construction company with 2 shareholders. They are seeking a bank loan of $1,000,000 for expansion. All of their construction projects are of similar nature and are in the state of Georgia. The shareholders place great emphasis on the quality of their financial statements and adherence to ethical business practice. One of the shareholders was a former auditor and placed great emphasis on having robust nd effective internal controls.

Assume that, based on your professional judgment, you made the following initial planning judgments at your client. In this scenario, you can make risk assessments at five levels (i.e., very low, low, moderate, high, very high).

YOUR INITIAL PLANNING JUDGMENTS:

AR	IR	CR	DR
Initially set at _____	You assessed	You assessed	You computed

Now assume that your audit manager reviewed your planning judgments and disagreed with your CR assessment. The audit manager, based on her professional judgment, deemed that CR should be assessed at Medium rather than High

Based on your INITIAL Planning judgments, do you expect the amount of audit evidence required to be (LOW, MEDIUM, or HIGH). Briefly justify your response.

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Based on the one change made by the audit manager, you expect the amount of audit evidence required to be higher or lower than your INITIAL PLANNING JUDGEMENT. Briefly Justify your response.

Please answer this reviewing for final and not quite understanding this