Factor	IR Factor (IR: Inherent Risk)	CR Factor (CR: Control Risk)	Why? Comments	Impact on RMM (RMM: Risk of Material Misstatement)	Impact on DR (DR: Detection Risk)
1	Apollo advanced $1.25 million to Larry Lancaster's secretary.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
2	Apollo does not have adequate documentation supporting customer returns of product.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
3	Apollo has maintained a positive trend in net income over the past several years, and has a strategic emphasis on meeting profitability targets.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
4	Apollo has not allowed your firm to speak with the predecessor auditor about their withdrawal after last year's engagement.	Yes/No	Yes/No		+(increase)/-(decrease)/No effect	+(increase)/ -(decrease)/No effect
5	Apollo installed a new computer system mid-year.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
6	Apollo leases all their properties.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
7	Apollo requires a customer purchase order and credit approval in order to process a sale to a wholesale customer.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
8	Apollo suspended all R&D activities as a cost savings measure, and the lab will be converted into a gym for corporate executives.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
9	Apollo utilizes sales invoices and shipping documents are pre-numbered, but the sequence is not checked for missing invoices.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
10	Apollo's accounting and control manual has not been kept up to date.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
11	Apollo's CEO, Larry Lancaster, joined the company a few years ago.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
12	Apollo's credit manager reports to the VP of Marketing.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
13	Apollo's internal audit director, Karina Ramirez, just joined the company this year.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
14	Apollo's IT staff is small and precludes optimal segregation of duties over the information system.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
15	Apollo's sales to employees, COD sales, disposals of property, cash sales and scrap sales are not subject to the same set of controls as credit sales.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
16	In the current year Apollo has seen a significant increase in net income despite stagnant sales.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
17	Larry Lancaster, Apollo's new CEO is quite domineering and dictates accounting issues.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
18	Product litigation against Apollo has recently been settled, but Apollo admits no liability.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
19	Sales are below budget.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect
20	The internal audit director, Karina Ramirez, reports directly to the audit committee.	Yes/No	Yes/No		+(increase)/ -(decrease)/No effect	+(increase)/ -(decrease)/No effect