Answer the following questions based on the information for Cloud 9 presented in the appendix to this text and the current and earlier chapters. You should also consider your answers to the case study questions in earlier chapters.

Required

Consider the effects on Cloud 9’s accounts and business of opening additional retail stores and introducing additional products (workboots).

(a) Describe how this business change would affect audit risk.

(b) What changes would you expect to see in inventory transactions and balances? Be specific in your answer.

(c) Which inventory balance and transaction assertions would be most affected? Explain.

(d) Describe the population(s) and suggest a sampling approach for controls and substantive testing for inventory.