Question 2. In assessing the risks of material misstatement, which of the following identified issues would affect the assessment of INHERENT risk?

(1) The audit firm was appointed just before the financial year end

(2) The existence of significant transactions with related parties during the year

(3) The implementation of a new accounting software package during the year

(1) only

(2) only

(1) and (2)

(2) and (3)