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Auditor estimated the following "Planned Detection Risks" for the cycles:
1. Sales and Collection Cycle: High
2. Acquisition and Payment Cycle: Medium
3. Payroll and Personnel Cycle: Low
4. Inventory and Warehousing Cycle: Medium
5. Capital Acquisition and Repayment Cycle: Medium
Required:
1. Which cycles will become the easiest and the hardest to audit? explain with examples. .
2. How will "highly effective internal controls" affect the given "planned detection risks?" explain with examples.
3. How will "acceptable audit risk" affect "planned detection risk?" explain with examples.
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