Audit Risk

ME Bank opened a branch in a suburban town twenty miles from its principal place of business. Although the branch is not yet profitable due to completion from several well-established regional banks, management believes that the branch will be profitable by 2021.

1. ME Bank increased the efficiency of its accounting operations by installing a new sophisticated computer system.
2. ME Bank hired a new marketing director.
3. A former employee filed a lawsuit against ME Bank alleging age discrimination.
4. ME Bank increased its casualty insurance coverage on its ATM machines.
5. ME Bank renewed its long-term lease obligation on the branch offices.

Required: Based only on the information above, indicate with an X in the table below whether the following factor increase, decrease or have no effect on audit risk.

	Factor	Increased Audit Risk	Decreased Audit Risk	No effect on Audit Risk
1	Branch management authority
2	Government Authority
3	Company profitability
4	Demand for product
5	Interest Rates
6	Availability of mortgage funds
7	Involvement of principal shareholder in management
8	Branch manager compensation
9	Internal auditor reporting relationship
10	Accounting department turnover
11	Continuing audit relationship
12	Internal controls over accounting estimates
13	Reponses to proposed audit adjustments
14	New unprofitable branch
15	New computer system
16	New marketing director
17	Filing of lawsuit
18	Increase in insurance coverage
19	Renewals of long-term lease
20	Biweekly payroll schedule