You are the auditor in charge of the audit of Evermore Foods, a small, owner$-$managed distribution company that distributes baking supplies to small, owner$-$managed retail stores across Canada. There are two people in the accounting office, and the rest of the employees are operational, sales, or procurement.

Required: For each of the following situations, determine how the situation will impact the overall audit risk, inherent risk, control risk, and audit approach. State any assumptions that are necessary for you to reach your conclusion.

A$.$ Evermore Foods has implemented a year$-$end bonus plan for all sales employees. They will receive a lump sum bonus if they exceed the prior year's sales by $10\%.$ All sales are recorded when the orders are placed by the sales representative, as most items are shipped on the date the invoice is received. The owner has indicated that he believes the entire sales team should achieve their bonus targets as they always seem to have a big week just before year$-$end.

$\backslash$table$[[,$Response,$],[$Audit Risk,,$],[$Inherent Risk,,$],[$Control Risk,,$],[$Audit Approach,,$]]$

B$.$ For four years now, you have been auditing Evermore Foods. The accounting employees are experienced. The owner is involved in all of the key day to day operations and financial decisions. Net income has been steadily growing for the past $25$ years.

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