EP 10-6 Determining Risk of Incorrect Acceptance. (LO5,6) In the dialogue between the Kingston auditors, Frank said, "hour analytical procedures related to receivables didn't show much. The total is down, consistent with the sales decline, so the turnover is up a little. If any misstatement is in the receivables total, it may be too small to be obvious in the ratios."

Jill replied. "That's good news if the problems are in material. Too bad we can't say analytical procedures reduce our audit risk. What about internal control?"

Fred responded: "I'd say it's about a 5050 proposition. Sometimes controls seemed to work well; Sometimes it didn't. I notice a few new people doing the invoice processing last week when we were here for a conference. Incidentally, I lock the inherent risk problems and internal control risk problems together when I think about internal control risk. Anyway, firm policy is to plan example for a low overall audit risk for the receivables."

Required:

based on this dialogue information, use the expanded risk model to determine a test of detailed risk. Really this risk to sample size determination.