Identify two key assertions at risk of material misstatement

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Reference no: EM133924756

Question: Fresh Fields Ltd is a privately owned distributor of organic foods, audited for the year ended 30 June 2024. During the planning phase, the following issues were identified: Cash & Bank The company maintains five operating bank accounts plus one $2 million term deposit pledged as collateral for a loan. Bank reconciliations are prepared by the finance manager but often completed several weeks late.

Accounts Receivable FreshFields sells to both major supermarkets and independent health food stores. $800,000 of receivables are >120 days overdue. Management insists most will be collected but has not adjusted the allowance for doubtful debts. Inventory Inventory consists of fresh produce (short shelf life) and packaged organic products. Stock is held in two third-party cold storage facilities. Year-end stocktake showed several categories of slow-moving packaged goods still carried at full cost.

Property, Plant & Equipment (PPE) The company purchased new delivery vans during the year, financed via hire-purchase. Some old vans were sold, but disposal entries had not yet been processed at year-end. The CFO has proposed extending the depreciation period for vehicles from 10 years to 15 years. Required: For each balance sheet item above:

a) Identify two key assertions at risk of material misstatement. Get online assignment help-AI & plagiarism-free-now!

b) Propose one substantive procedure for each assertion, explaining how it provides audit evidence.

Reference no: EM133924756

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