The first step in every audit is assessing the risk of misstatement at the financial line item level. While this assessment varies from client to client, there are some financial statement assertions (FSAS) that are commonly of key consideration for certain financial statement line items. In this problem, indicate the one or two FSAs (as indicated by the number of boxes) and explain how that risk relates to the financial statement line item. There may be more than one or two good answers for each line item, so I will look to your explanation for correctness. You may assume the company under audit is an established manufacturing firm. Explanation Financial Statement Line Item Cash Risky Financial Statement Assertion 1. Existence Companies have an incentive to show they have more liquidity available so would overstate cash; further, theft of cash would result in the company having less cash than they report Accounts Receivable Inventory Property, Plant, and Equipment Accounts Payable Sales