Review the Seven Guys Case Study to complete this problem. Match the characteristic of the case with an assessment of inherent or control risk. Seven Guys Audit Case Study SG purchases most of its food from restaurants and other ethnic food suppliers. In fact, many of the food purchases are with 1 restaurants related to families of the seven guys. SG obtains the food from one or more restaurants or grocers, adds preparation in some cases, and delivers and arrange it for the customer. SG's business continues to grow, and it now has a significant amount of net worth. The state of the economy at the time of this hypothetical case is stable. The US is not in 3 _- recession and there is NO pandemic. The Twin Cities area is growing. Food prices are increasing at a rate of about 3% per year. Interest rates are high compared to prior years, with the prime rate at about 8%. All seven guys share equally in the common 3.- stock of SG and all are members of the board of directors. Twice yearly, the seven guys meet to think about future trends that may affect their business. In addition, monthly staff meetings 2___ are held so that information about customers, vendors and operations can be heard from all employees, including those working close to the customer. Aaron, Brendan, Abdi, Tong, Carlos, Isaac and Miftah met while majoring in accounting at TC University. After graduation, they continued to meet for lunch, to share stories about their adventures as accountants. They particularly enjoyed trying new ethnic restaurants. All seven guys come from At first, they started small (keeping their regular accounting jobs) but over a period of ten years, they grew a business, such that four of the seven guys, now work at Seven Guys Catering (SG), full-time. SG's business continues to grow, and it now has a significant amount of net worth. To encourage SG employees to provide great service and maintain a quality offering, SG offers a profit-sharing plan whereby employees share in 3% of the operating income of SG. SG's wages and salaries are 3 slightly below those of large firms in the Twin Cities, but SG's management utilizes other positive workplace incentives, such as frequent feedback to employees. Mr. Tong said, "this feedback indicates our employees are trustful of our management team and satisfied with their work environment." When the food is delivered, SG recognizes 3 _._ revenue and creates an invoice for the customer. The seven guys do not wish for an outside party to become a stockholder. Rather, SG would like to provide a share repurchase agreement. A share repurchase requires that a value be set on the company's stock and 3 will also require a bank loan to finance the repurchase. SG is seeking an audit of its financial statements so that it could obtain an independent stock valuation and loan, if necessary, for this purpose. Therefore, this is the first year that SG is seeking an audit from a CPA firm. 3 During the year, SG implemented new accounting software. Expense is recognized at the point of 3 delivery. This typically involves the recording of an invoice from one or more restaurant vendors to accounts payable. Mostly increases inherent OR control risk of 1. material misstatement. 2. Mostly decreases inherent OR control risk of 2. material misstatement. 3. Has little or no effect on inherent or control risk