QUESTION 1

CCSU, CPA , is considering audit risk at the financial statement level in planning the audit of Devil Companys financial statement for the year ended December 31, Year 1. Devil is a privately owned entity that contracts with outside companies to provide facilities management services for professional offices. Based only on the information indicated, determine whether each of the identified factors would most likely increase, decrease, or have no effect on the Risk of material misstatement (RMM).

- A. B. C.	An initial public offering of Devils stock is planned for late Year 2.
- A. B. C.	This was the first time if 5 years Devil operated at a profit because on of its current clients relocated its corporate headquarters to a large local facility, providing a significant increase in revenue.
- A. B. C.	The internal auditor reports to the controller and the controller reports to Ava, the majority stockholder, who also acts as a chief executive officer.
- A. B. C.	The accounting department has experienced a high rate of turnover of key personnel.