''Auditing"

For each of the following risk factors, identify the type of potential misstatement and whether it would have a pervasive effect on many or all assertions:

1 Senior management has offered large bonuses for managers to meet financial targets.

2 Analytical procedures for a manufacturer show a significant increase in both profit margins and inventory turnover days.

3 The industry that the company operates in is experiencing economic difficulties.

4 Analytical procedures for a retailer show significant decreases in both profit margins and inventory turnover days.

5 An employee responsible for cash payments did not receive a pay rise due to poor performance.

6 The BOD has a "rank and yank" system for all staff where the bottom 10% get sacked every year.