QUESTION 1 Alice Kim CPA is considering audit risk at the financial statement level in planning the audit of Nature's Friend Bank's (NF) financial statements for December 31, 2019. Audit risk at the financial statement level is influenced by the Inks of material misstaterrvent. including fraud risks. For each of the following factors, indicate the effect on risk of material statement RMM) Increases RMM - decreases RMM . no effect Also, is it a fraud risk? - yes Fraud risk .no Fraud risk . no effect You have five choices: Increase RMM and Yes creates a fraud risk -Increase/Yes Increase RMM and No does not create a fraud risk - Increase/No Decrease RMM and Yes creates a fraud risk-Decrease/Yes Decrease RMM and No does not create a fraud risk-Decrease/No No effect C. Government regulation and overview of the banking industry is A. Increase Yes extensive and effective Decrease/Yes A The banking industry has been significantly impacted by the C. downturn in the economy in recent years. Decrease/No NFB's board of directors is controlled by Smith, the majority stockholder, who also acts as the chief executive officer E. No effect A Interest rates have been very volatile recently D. NFB internal audit function reports to the audit committee D.No effect Alice Kim's firm has audited NEB for the last years wade in China Sa QUESTION 1 Alice Kim CPA is considering audit risk at the financial statement level in planning the audit of Nature's Friend Bank's (NF) financial statements for December 31, 2019. Audit risk at the financial statement level is influenced by the Inks of material misstaterrvent. including fraud risks. For each of the following factors, indicate the effect on risk of material statement RMM) Increases RMM - decreases RMM . no effect Also, is it a fraud risk? - yes Fraud risk .no Fraud risk . no effect You have five choices: Increase RMM and Yes creates a fraud risk -Increase/Yes Increase RMM and No does not create a fraud risk - Increase/No Decrease RMM and Yes creates a fraud risk-Decrease/Yes Decrease RMM and No does not create a fraud risk-Decrease/No No effect C. Government regulation and overview of the banking industry is A. Increase Yes extensive and effective Decrease/Yes A The banking industry has been significantly impacted by the C. downturn in the economy in recent years. Decrease/No NFB's board of directors is controlled by Smith, the majority stockholder, who also acts as the chief executive officer E. No effect A Interest rates have been very volatile recently D. NFB internal audit function reports to the audit committee D.No effect Alice Kim's firm has audited NEB for the last years wade in China Sa
