For each case, select one or two characteristics, identify the risk(s) associated with this characteristic and determine what the consequences could be for the financial statements.

Type of activity	Characteristics			Risks	Likely impact on the financial statements
1.Sector of activity in decline in EU: textile industry	Loss of part of the customer base, fall in turnover			Overstatement of revenue	Non-compliance with the cut-off principle
	Decline in profitability
2.Hi-fi and household appliances trade	Stock of sensitive products
	High technical obsolescence
3.Heavy industrial production	Production cycle > 1 year
	Expensive fixed assets
4.Banking activity	Risky financial investments
	Conditions for granting loans to companies
Legal situation		Characteristics	Risks			Likely impact on the financial statements
5.Fully-owned subsidiary		Absence of an opponent
6.Listed company		Pressure on share price
Quality of management		Characteristics	Risks			Likely impact on the financial statements
7.Executive paid according to results		Importance of reporting profit accounts
8.High turnover of accounting staff		Lack of follow-up in the bookkeeping