For each case, select one or two characteristics, identify the risk(s) associated with this characteristic and determine what the consequences could be for the financial statements.

Type of activity Characteristics Risks 1. Sector of activity in Loss of part of the decline in EU: textile industry customer base, fall in tumover Overstatement of revenue Likely impact on the financial statements Non- compliance with the cut- off principle 2. Hi-fi and household appliances trade 3. Heavy industrial production Decline in profitability Stock of sensitive products High technical obsolescence Production cycle > 1 year Expensive fixed assets Risky financial investments Conditions for granting loans to companies 4. Banking activity Legal situation Characteristics Risks Likely impact on the financial statements 6. Risks 5. Fully-owned subsidiary Absence of an opponent Listed company Pressure on share price Quality of management Characteristics 7. Executive paid according Importance of reporting to results profit accounts 8. High tumover of Lack of follow-up in the accounting staff bookkeeping Likely impact on the financial