Determine the degree of effect for each category: N (no effect), I (increase), D (decrease) or C (controlled). CR (Control Risk)IR (Inherent Risk)AAR (Acceptable Audit Risk)PE (Planned Evidence) 

1. Client management materially increased long-term debt.NANDINI

2.After evaluating and testing controls, the auditor decided that controls were less effective than planned. 

3. Indicators of financial condition improved from the prior year. 

4.The company began international sales in Spain and entered into exchange contracts to minimize currency exchange risks.  

5.The company changed from privately held to publicly held. 

 6.There has been a change in several key management personnel. The company’s financial situation has deteriorated and it is seeking additional bank financing. 

7.You find controls over inventory have improved compared to the prior year. You observe that due to technological changes, the client's inventory may be somewhat obsolete. 8. Management is planning to sell the business. As a result, several key employees have left the business. The gross margin has increased significantly compared with the preceding year.