Consider Figure 7-5, which depicts the impact of controls on risk assessments. For each of the following

Question:

Consider Figure 7-5, which depicts the impact of controls on risk assessments. For each of the following management controls, describe the extent to which you believe the risk moved down or to the right on the grid. In other words, to what extent is the magnitude of possible misstatement or likelihood of misstatement reduced?

a. The CEO of the company reviews budget variances for each senior VP on a monthly basis.

b. The manager in charge of the company's most important product line investigates market reports and production plans for each product on a weekly basis.

c. A major auto manufacturer's risk committee reviews J.D. Power and Associates and Consumer Reports evaluations of their vehicles. Vice presidents of operations, research and development, and marketing are then allowed to respond to the criticisms and accolades provided in the reports.

Figure 7-5