Hello, I need some help with my assignment. Please look into three questions and my answers and correct them for my if any mistakes.

Question 2 No. Situation Type of risk Level of risk Reason 1 The company is experiencing significant cashflow difficulties and is currently seeking to obtain external financing Detection Risk Decrease Risk that auditors may fail to detect a material misstatement 2 The client is a small family-owned company with few employees. The owners have not yet hired an accounting clerk and the bookkeeping function is performed on an ad-hoc basis whenever one of the members has time to complete the tasks. The accounting records are often left incomplete for several months at a time. A client's vice president, finance, was recently charged with tax fraud by the Canada Revenue Agency. Inherent Risk increase This is a risk that due to a lack of existence of complex transactions, any item on the financial statements is materially misstated. Inherent Risk increase The fact of a management integrity, it is a risk of management overstating income. 4 The client operates 40 retail outlets. Every year the auditor attends the inventory count for a sample of 20 stores. In the current year the auditor increased the number of locations attended to 25 stores Inherent Risk decrease This is a risk that due to increasing of the population, there is more chance to detect a material misstatement. 5 An auditor observes a significantly lower than expected number of compliance deviations while testing a client's internal controls. Controlled Risk Decrease Deviations due to noncompliance can be detected and controlled; 6 Subsequent to the audit, the client implemented all internal control recommendations made by the auditor. Controlled Risk Decrease 7 The company established an internal audit department in the current year being audited Controlled Risk decrease An Auditor's assessment of Control Risk is based on the study and evaluation of the company's controlled systems. This is a risk that material misstatement was not prevented or detected. It will reduce risk of material misstatement because of the inherent limitations of internal control. 3 Question 4 The purpose of substantive testing is to verify the assertions made by management in the financial statements. Consider the following unrelated audit tests, which a CGA performed for the audit of the financial statements of a client with a fiscal year end of December 31, 2013. Required For each of the six audit procedures listed below, identify the primary management assertion being tested and the account balance being verified, name the specific audit procedure being used, and state the quality of the audit evidence obtained (high, moderate, or low), explaining why the evidence is the quality level you specify. Organize your answer with these headings: Management assertion and account balance Question (Audit Procedure Required) Calculated the ratio for sales commission expense to sales as a test of sales commission. Reviewed the accounts receivable balances with the credit manager to discuss collectability. Audit procedure Management Assertion and account balance Quality of audit evidence Audit Procedure Quality of audit evidence(high, moderate, low) Existence/validity and rights and obligations or ownership of the securities Recalculationperform data entry procedure with automated missing data control High quality evidence -- the auditor obtained direct knowledge through physical examination. Confirmation/Existence External confirmation from the Third Parties Moderate Qualityexternal and internal documentation Obtained a letter from the client's lawyers stating that they are not aware of any existing lawsuits filed against your client. Examined a piece of equipment to make sure that equipment was acquired and is operating. Recalculated depreciation for each category of property, plant, and equipment as at December 31, 2013. Examined and counted Canadian government bond certificates held as investments as of December 31, 2013. Confirmation/Existence External confirmation from the Third Parties High quality evidence- the auditor received external documentation Inspection of Physical Assets Inspection of physical assets and bills and the costs, by documents with degree of reliability indicating ownership and value. High quality evidence -- the auditor obtained direct knowledge through physical examination. Valuation of accounts receivable. Recalcualtionrecompute amortization expense using declining balance method High quality evidence -- the auditor recalculated the "aging". Inspection of Documents, ownership High quality evidence -- the auditor obtained direct knowledge through physical examination. Confirmation/Existence Question 1 The following are independent statements concerning certain auditing issues. Required Indicate whether you agree or disagree with each statement, and explain your reasoning. a. An adverse report would be issued when an auditor was unable to observe a company's inventory count at the beginning of the year because the auditor was appointed during the year. Disagree, due to a scope limitation the auditor is appointed during the year and is unable to observe the inventory count at the beginning of the year. It is assumed that the prior year's figures were unaudited and that the auditor was satisfied with respect to all other aspects of inventories and all other opening balances. b. When encountering a violation of generally accepted accounting principles in an audit of financial statements, the auditor will decide between an unmodified report, a qualified report, or a disclaimer of opinion report. The main consideration will be the materiality of the matter in question. Agree, (not sure why) c. A public accountant is not required to be independent of an entity to perform a compilation engagement for that entity. In such a situation, however, disclosure of a lack of independence is not required. Disagree, Compilation engagement also requires complete and independent control under which an auditor can prepare his report. However less independence may be required as compared to review engagement. Judgment is required by an auditor on both engagement and therefore it should be independent. d. If there is significant doubt and material uncertainty that an auditee will continue operating in the future and these doubts have been properly disclosed in the notes to the financial statements, the auditor is required to include an emphasis of matter paragraph in the audit report. e. When replaced as auditor, the outgoing auditor has a professional responsibility to reply promptly to an enquiry letter from the incoming auditor, but is not required to allow the incoming auditor access to the most recent year's audit working papers. Agree, the auditor is responsible to respond to an enquiry letter and a member shall transfer to the client all books and documents belonging to the client which are in the member's possession. Although, the member is not responsible to share most recent year's audit working papers since the papers belong to the member. f. When an auditor uses a substantive audit approach (setting control risk at maximum) to an audit of financial statements, the auditor is still required to gain an understanding of the internal controls. Don't know (where to find in CICA)? g. The auditor is not required to use the same approach (combined or substantive) for all transaction cycles as well as for the various transaction or balance-related audit objectives. Don't know (where to find in CICA)