You are considering acceptable audit risk at the nancial statement level. For each of the following independent scenarios, based only on the information provided, indicate the effect on acceptable audit risk compared to a typical private company audit.

a. LVD is a pharmaceutical company that has three successful drugs. They have recently decided to make a public offering of their stock.

b. Budd Co., a private company, has approached your audit rm to bid on their annual audit. During discussions with the CFO, you learn that the company is ling for bankruptcy.

c. Stephens Inc., a private company, has recently installed a new accounting information system.