Consolidated financial statements present the financial position and results of a parent and its subsidiaries as one economic entity. A risk is that poor performance of an individual subsidiary may be concealed within the group's overall results, especially if stronger entities offset weak results. Option B is generally incorrect because consolidation is designed to reflect entities under common control. Option C is not the main risk because consolidated statements do show the group's combined assets, liabilities, equity, income, and cash flows. Option D is incorrect because intercompany transactions should be eliminated during consolidation, not included in a misleading way. Internal auditors should consider subsidiary-level performance, consolidation adjustments, eliminations, and disclosure quality. Therefore, Option A is correct.

After an initial risk analysis identifies areas of concern, the next appropriate step is risk assessment. Risk assessment evaluates the significance of identified risks by considering likelihood, impact, control effectiveness, vulnerability, and priority. Risk identification has already occurred because several areas of concern were found. Identification of context normally occurs earlier, when the auditor or risk team defines objectives, scope, environment, criteria, and risk appetite. Risk response comes after assessment because management must understand the severity and priority of risks before deciding whether to accept, reduce, avoid, or share them. In internal audit planning, this sequence is critical because audit resources should be focused on higher-risk areas. Therefore, after initial risk analysis, the most appropriate next step is risk assessment, Option D.

Comprehensive and Detailed In-Depth Explanation:
Partnership contributions should be recorded at their fair market value (FMV) at the time of contribution, ensuring equitable financial representation.
Option A (Original cost of the equipment) - Not appropriate since the asset's current fair value is relevant, not its historical cost.
Option B (Weighted average approach) - Not applicable; capital accounts should reflect actual contributed value.
Option C (No action necessary) - Incorrect because partners contributed assets of different values, making an equal capital credit unfair.
Since partnership accounting requires fair market value for capital accounts, Option D is correct.
Reference: IIA Financial Accounting - Partnership Equity Contributions

Contribution margin equals sales revenue minus variable costs. On a per-unit basis, the contribution margin is the selling price of $12 less the variable cost of $7, which equals $5 per unit. For projected sales of 100,000 units, total contribution margin is 100,000 × $5 = $500,000. Fixed costs are not deducted when calculating contribution margin; they are deducted later to determine operating income. If fixed costs of $350,000 were deducted from the $500,000 contribution margin, projected operating income would be $150,000, but that is not what the question asks. Internal auditors reviewing cost-volume-profit calculations should verify that variable costs and fixed costs are classified correctly. Therefore, the correct projected total contribution margin is $500,000, making Option B correct.

Reference: IIA Business Knowledge for Internal Auditing, MBO section.