Reference no: EM132968556

Question - You are the audit senior that has been assigned to the audit of Navigator Ltd for the year ended 31 March 2021. Navigator Ltd manufactures GPS navigation systems for motor vehicles and exports these to car manufacturers in South Korea and Japan. The South Korean market has grown rapidly over the past two years and has become the company's most significant customer base, representing 75% of Navigator Ltd's revenue. All contracts are payable in US dollars.

In the past three months, the volume of orders from Navigator Ltd's South Korean customers has fallen 20%, and two major customers have requested extended payment terms. Navigator Ltd is also under pressure from Chinese competitors who have undercut Navigator Ltd.'s prices by 25%.

Required -

a) Identify TWO financial position general ledger accounts most likely at risk of material misstatement and provide a brief explanation of why each is at risk.

b) Identify ONE audit objective (assertion) most likely affected for each account identified in part (a).

c) For each of the accounts and the associated key audit objective (assertion) you identified in part (a) and (b), recommend ONE specific substantive test of detail that would be most responsive to the risk identified.