For each of the following situations, explain how the risk of material misstatement should be assessed and

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Question:

For each of the following situations, explain how the risk of material misstatement should be assessed and what effect that assessment will have on detection risk.

MaxiWrite Corporation is one of several companies engaged in the manufacture of high- speed, high- capacity data storage devices. The industry is very competitive and subject to quick changes in technology. Maxi- Write’s operating results would place the company in the second quartile in terms of profitability and financial position. The company has never been the leader in the industry, with its products typically slightly behind the industry leaders in terms of performance.