1. Slipway Limited, a listed company, has been experiencing declining sales over the last 2 years. Cost cutting has proved difficult due to the high level of importedmachinery used in Slipway'soperations and consequently margins have been falling. While the bankers are presently happy to continue providing Slipway with loan facilities, they do expect to see improved results in the next financial report. Articlesabout Slipway's expected financial results appearing in recent press reports all had quite a pessimistic tone.

For each of the above independent situations describe the overall impact on audit risk and identify the specific component(s) of audit risk affected.