Response to the following:
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 firm to bid on their annual audit. During discussions with the CFO, you learn that the company is filing for bankruptcy.
c. Stephens Inc., a private company, has recently installed a new accounting information system.