1. Consult Paragraphs 5–8 of PCAOB Auditing Standard No. 8 and Paragraphs 7–10 of PCAOB Auditing Standard No. 12. Based on your understanding of inherent risk assessment and the case information, identify three specific factors about Waste Management that might cause you to elevate inherent risk. When identifying each factor, indicate the financial statement account that is likely to be most affected (and briefly discuss why it is most affected).
2. Consult Paragraphs 29 and 32 of PCAOB Auditing Standard No. 5. Identify the types of revenue earned (a brief description will do) by Waste Management. Do you believe that any of the different types of revenue earned by Waste Management might be subject to significantly differing levels of inherent risk? Why or why not?
3. Consult Paragraphs 8–10 of PCAOB Auditing Standard No. 13. Comment on how your understanding of the different types of revenue earned (in Question 2) would influence the nature, timing, and extent of your audit work at Waste Management.
4. Consult Paragraphs 52–53 of PCAOB Auditing Standard No. 12. For one of Waste Management’s revenue sources (please choose one), brainstorm about how a fraud might occur. Next identify an internal control procedure that would prevent, detect, or deter such a fraudulent scheme.