Part a - Perform the following tasks and document them in the ABC Risk and Material Memo Template Word document. · Preliminary Inherent Risk Assessment - Review the description of ABC Applia

Part a - Perform the following tasks and document them in the ABC Risk and Material Memo Template Word document.

·         Preliminary Inherent Risk Assessment - Review the description of ABC Appliances, Inc. and identify four entity-level inherent risks based on the information provided.  I have listed one potential inherent risk area as an example and you need to add four more to the list.  Inherent risks can flow from client's business risks, the nature of its governance structure, and its strategic plans.  However, you need to be clear about how your risks create an increased risk of material misstatement in the financial statements and not just how they might create risks of lower operating or business performance for the firm. 

Thus, for each inherent risk, describe the feature of the firm you believe affects inherent risk and explain how and why.  By "how," I mean whether it increases or decreases inherent risk.  Make sure your "how" addresses a specific risk to the accuracy of the financial statements and whether audit effort should be increased or decreased for specific accounts or related groups of accounts if possible. 

Limit your inherent risk analysis to the following sections of the case:

·         Description of Firm and Market Conditions

·         The Control Environment (only identify issues related to inherent risk)