You are the in-charge audit senior on the audit of Socktop Ltd for the year ended 30 June 2015. In the audit plan receivables, inventory and warranty provisions were identified as significant risks and specific audit attention was devoted to these areas. The following is an extract from the draft financial accounts prepared by Socktop Ltd management for the year ended 30 June 2015 and the related provisions as critical audit areas.

In testing these areas representative samples were selected and the results of these tests show the following:

Required

Discuss the effect of these tests on your conclusions about each area and state the impact on your audit opinion.

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$000s Receivables 4122 Inventories 3589 Warranty provision 1788 Profit before tax 5097