QUESTION 4) (25 pts) The figure below shows the direction of the relationships between the types of risks and the level of audit evidence in the audit risk model. Explain the figure in your words. (400 words) FACTORS INFLUENCING RISKS RISKS AUDIT EVIDENCE . Reliance by external users Likelihood of financial failure Integrity of management Acceptable audit disk D D Nature of business . Results of previous audits Initial versus repeat engagement Related parties Complex or nonroutine transactions Judgment required - Makeup of population - Factors related to misstatements arising from fraudulent financial reporting Susceptibility of assets to misappropriation Inherent sk Planned detection risk Planned audit evidence D Effectiveness of internal controls Planned reliance Control isk D = Direct relationship: 1 = Inverse relationship *Fraud risk factors. These may also affect acceptable audic risk and control risk