Assume that you are the new audit senior on the LV Drug Corporation (LVD) engagement. LVD is a pharmaceutical company that has three successful drugs and a number of drugs in progress in its research and development pipeline. You are considering your audit plan and it is important to identify the inherent risks that LVD has and how they relate to the planning process. You have established that your firm has audited LVD for the last four years. Will this fact tend to increase, decrease, or have no effect on inherent risk? Explain the reasoning for your answer.
Assume that you are the new audit senior on the LV Drug Corporation (LVD) engagement. LVD is a pharmaceutical company that has three successful drugs and a number of drugs in progress in its research and development pipeline. You are considering your audit plan and it is important to identify the inherent risks that LVD has and how they relate to the planning process. You have established that your firm has audited LVD for the last four years. Will this fact tend to increase, decrease, or have no effect on inherent risk? Explain the reasoning for your answer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Assume that you are the new audit senior on the LV Drug Corporation (LVD) engagement. LVD is a pharmaceutical company that has three successful drugs and a number of drugs in progress in its research and development pipeline. You are considering your audit plan and it is important to identify the inherent risks that LVD has and how they relate to the planning process.
You have established that your firm has audited LVD for the last four years. Will this fact tend to increase, decrease, or have no effect on inherent risk? Explain the reasoning for your answer.
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