Sales and Collection Cycle Expect some misstatements (medium) Acquisition and Payment Cycle Expect many misstatements Payroll and Personnel Cycle Expect few misstatements Inventory and Warehousing Cycle Expect many misstatements Auditor's assessment of expectation of material misstatement before considering internal control (inherent risk) (high) (low) 3 (high) 1 Medium effectiveness High effectiveness High effectiveness Low effectiveness (low) (low) (high) B Auditor's assessment of effectiveness of internal controls to prevent, or detece and correct, material misstatements (control risk) (medium) 4 2 Please explain how the auditor estimated the given risk levels