Below are four situations that involve the audit risk model as it is used for planning audit evidence requirements in the audit of inventory. For each situation, calculate the missing planned detection risk or the audit risk percent as required. (4 marks) SITUATION 1 2 3 4 Acceptable Audit risk 8% 5% Inherent risk 100% 80% 50% 20% Control risk 100% 100% 40% 30% Detection risk 1% 5% Which sequence is correct? 10%, 6.4%, 10% and 8.33% 10%, 1%, 1% and 83.3% 1%, 8%, 1% and 833% 1%, 10%, 1% and 83.3% Which of the following documents shows the terms of the contract between the PA firm and the client? Letter of representation Engagement letter Confirmation letter Management letter Which of the three conditions for fraud (fraud triangle) would the following be considered or could lead to? "An ineffective internal audit department, causing some internal controls to be ineffective". Opportunities Attitudes and Rationalizations Tone at the top Incentives/Pressures Which of the following is not one of the four broad objectives of management when designing an effective system of internal control? Strategic high-level goals that support the mission of the company Prepare accurate and reliable financial statements Reliable Financial Reporting Compliance with Laws and Regulations