1. Identily how the following situation would affect an auditors risk analysis for a company should include the following: Identify how the situation affects overall Audit Risk (AR) - that is, is the AR risk increased, decreased. or not affected by the facts. Specify why the situation affects Audit Risk as you answered above. If the situation increases or decreases one of the three risk components of the audit risk formula. specify which risk it impacts and why. Situation: Your firm has been appointed as an auditor for a new client and it's the first year that you wilf be performing an audit for the client. The client operates in a complex industry that your firm doesn't have many clients in and the client dismissed the previous auditors because the client claimed the previous auditors audited "too much detail!" 2. A. Identity how the following situation would afect an aucitors misk andys tor a company. Your answer should include the following: B. Identify how the situation affects overall Audit Risk (AR) - that is is the AR is increase, decrease a not affected by the facts. Specify why the situation affects Audit Risk as you answered above. C. If the situation increases or decreases one of the three risk components of the audit risk formula, specify which risk it impacts and why 3. Identify how the following situation would affect an auditor's risk analysis for a company. Your answer should include the following. A. Identify how the situation affects overall Audit Risk (AR) - that is, is the AR risk increased, decrease, or not affected by the facts. B. Specify why the situation affects Audit Risk as you answered above. C. If the situation increases or decreases one of the three risk components of the audit risk components of the audit risk formula? specify which risk it impacts and why. Situation: Your client, Big Britches, L.C, is planning an IPO in the next year and because of that the accounting & reporting responsibilities have significantly increased for the 6 person accounting department of Big Britches. This has caused turnover in the accounting department to be very high over the fast year because several of the old timers in the department didn't want changes to their responsibilities. Until this year, everyone in the accounting department had been with the company for over 10 years, some for over 30 years. The good news is that this turnover has allowed Big Britches to hire a new Controller, a new Accounting Manager and a new Senior Accountant over Corporate Reporting. The remaining two accountants are close to retirement, so they decided not to leave. The Accounting Clerk who has been there for 10 years decided to stay and is excited about the changes