Question 5 -

Acme Inc. has recently decided to expand operations. To finance this expansion, they have taken on a significant amount of new debt, some of which has strict debt covenants and penalties if interest is not paid on time. What is the most likely impact this will have on the audit risk model?

Question 5 options:

A - the auditor will lower the acceptable audit risk

B - the auditor will increase control risk

C - this will not impact the audit risk model

D - the auditor will decrease inherent risk