15 marks Substantive audit procedures and Assertions (A) Testing of Revenue cycles You are the audit senior at Smart & Associates and have been assigned to the audit of Location Ltd (Location) for the year ended 30 June 2015. Location 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 per cent of Location's revenue. All contracts are payable in US dollars In the past three months, the volume of orders from Location's South Korean customers has fallen 20 per cent, and two major customers have requested extended payment terms Location is also under pressure from Chinese competitors who have undercut Location's prices by 25 per cent Required: (a) Identify two significant statement of financial position accounts at risk of material misstatement and provide a brief explanation of why each is at risk (b) Identify the key assertion that is affected for each account identified in (a) (c) For each of the accounts and the associated key assertions you identified above, recommend a specific substantive test of detail that would be most responsive to the risk identified Note: Present your answer as follows in the answer book (a) Accounts at risk(b) Assertion Explanation c) Substantive test of detail (8 marks 15 marks Substantive audit procedures and Assertions (A) Testing of Revenue cycles You are the audit senior at Smart & Associates and have been assigned to the audit of Location Ltd (Location) for the year ended 30 June 2015. Location 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 per cent of Location's revenue. All contracts are payable in US dollars In the past three months, the volume of orders from Location's South Korean customers has fallen 20 per cent, and two major customers have requested extended payment terms Location is also under pressure from Chinese competitors who have undercut Location's prices by 25 per cent Required: (a) Identify two significant statement of financial position accounts at risk of material misstatement and provide a brief explanation of why each is at risk (b) Identify the key assertion that is affected for each account identified in (a) (c) For each of the accounts and the associated key assertions you identified above, recommend a specific substantive test of detail that would be most responsive to the risk identified Note: Present your answer as follows in the answer book (a) Accounts at risk(b) Assertion Explanation c) Substantive test of detail (8 marks