q15: Mark Fay is an audit senior at Holden & Ford, a large international audit firm. The audit partner has asked him to evaluate the following audit risks of a major international client. For each of the audit risks described below, complete the following

Required:

1. Identify the impact (i.e, increase or decrease) on the component(s) of audit risk affected and explain why it is an audit risk; and

2. Identify the prime audit assertion(s) to be tested and the key account balance(s) affected; and

3. Identify the best audit procedure to reduce the risk of material misstatement.

Impact on the component of Prime Best audit Description of audit risk assertion(s) procedure to audit risk reduce risk (1 affected (1 mark) (1 mark) and key mark) land explanation account las to why it is an balance(s) audit risk (1 affected (1 mark) (mark) Due to the economic downturn, your client now uses cheaper product components to reduce Costs. This has not impacted their sales or prices. However, your client is experiencing increased warranty claims for product repairs.