Final answer:
To determine if the five largest sales transactions should require an increase in inherent risk, consider factors such as transaction size, complexity, and any red flags or irregularities.
Step-by-step explanation:
The question is asking you to identify the five largest sales transactions and determine if they should require an increase in inherent risk. Inherent risk refers to the risk associated with a transaction or event independently of any internal control measures.
To determine if these transactions should require an increase in inherent risk, you need to consider factors such as the size of the transaction, the complexity of the transaction, and any potential red flags or irregularities.
If the five largest sales transactions are significantly larger or more complex than other transactions, or if they involve any suspicious or unusual aspects, then it may be reasonable to increase the inherent risk associated with these transactions.
Additionally, if the aggregate amount of these transactions represents a significant portion of the company's overall sales volume, it could also be considered a significant risk.