Instructions: Use this worksheet to identify the inherent risk. Enter (L) Low, (M) Medium, or (H) High for each category.

ACCOUNT	ENGAGEMENT RISK (1)	ACCOUNTING ISSUES (2)	POTENTIAL FOR FRAUD (3)	USE OF ACCOUNTING ESTIMATES (4)	OVERALL INHERENT RISK (L,M,H)
Cash	Low	Low	Low	Low	Low
Accounts Receivable
Allowance for Doubtful Accounts
Inventory
Land
Buildings
Accumulated Depreciation
Leasehold improvements
Accumulated Depreciation
Current Portion of Notes Payable
Trade Notes Payable
Accounts Payable - Wheatland
Accrued Expenses and Taxes Payable
Notes Payable
Equity
Revenue
Expenses
Other

At this point in the audit planning, you meet with the senior auditor on the Eagle View engagement, Christine Crawford. She is quite impressed with your interest in planning and has read your earlier memos. She is eager to continue your development of audit judgment and analysis. You will also be assisting with the some of the internal control testing, so, she wants to make sure you have a solid understanding of how to gather sufficient, appropriate evidence.

She asks you to prepare a memo (P 16) to address the Acceptable Audit Risk and components of the Audit Risk Module for Eagle View.

Ms. Crawford would like you to document:

Your understanding of the reliance on the financial statements by external users.

Your assessment of the likelihood of financial difficulties for Eagle View after the audit

Your assessment of managements integrity.

A completed Inherent Risk Worksheet (excel file) to accompany your memo.