Rafunt for each of the situations above; (i) explain, with reference to lain, with reference to audit assertions where appropriate, why sunce opriate audit evidence has not been obtained scribe one additional procedure that the audit assistant should perform. appropriate audir (ii) describe one verview of the audit risk model BASIC When planning a financial report audit, an auditor must understand aud and its components. The firm of Shi & Shu evaluates the risk of material misstatement disaggregating it into its two components: inherent risk and control tisk CHAPTER 5 OVERVIEW OF ELEMENTS OF THE FINANCIAL REPORT AUDIT PROCESS a m At it risk that is more more than once. Oth Required For each of the situations in the table directly illustrated. The components of at all. sk that is an once. e situations in the table below, select the component of a ted. The components of audit risk may be used on COMPONENT OF AUDIT RISK SITUATION ont fails to discover employee fraud on a timely basis because accounts are not reconciled monthly Cash is more susceptible to theft than an inventory of cod confirmation of receivables by an auditor fails to detect a material misstatement Disbursements have occurred without proper approval There is inadequate segregation of duties A necessary substantive audit procedure is omitted Notes receivable are susceptible to material misstatement, assuming there are no related internal controls Technological developments make a major product obsolete Au auditor complies with auditing standards on an audit engagement, but the shareholders sue the auditor for issuing a misleading financial report A cient, XYZ Ltd, lacks sufficient working capital to continue operations 5. 5.31 MODERATE Consider the following two independent