2. Substantive procedures and accounting estimates: 20 marks Richie Smith, an auditor, has a client who manufactures teddy bears, CareBears Ltd. The client company has a year-end of 31 July 2020. In December 2019, CareBears Ltd. changed its manufacturing process to improve the quality of the stitching to ensure its durability. Because of this increase in quality, the company decided to increase the warranty on its products from 2 years to 4 years in relation to all sales of bears made from 1 January 2020. From management's review of warranty claims relating to the new products, it was noted that claims were down by about 25% compared with the old product. Management made an estimate of the provision for warranty of $402,000 for 31 July 2020, up from $307,000 for the previous year. Required: Question 13 1 pts Question 2.1: (1 mark) Identify the various audit assertions that Richie Smith should consider for this part of the audit for CareBears Ltd? Valuation and Allocation Existence Completeness Cut-off Classification Rights and Obligations Occurence Accuracy Presentation and Disclosure Question 14 1 pts Question 2.2: (1 mark) What auditing standard would assist Richie Smith in performing his assessment as to the types of substantive procedures to use. ISA NZ 540 NZ ISA 500 NZ ISA 520 NZ ISA 315 ISA NZ 230 Question 15 2 pts Question 2.3: (2 marks) What phrases would be appropriate if you are required to justify your selection of the auditing standard to be used in this scenario. (There are multiple answers to this question). Objective Requires auditor judgement Easy to determine an exact measurement The potential misstatement is not significant Often leads to disputes between auditor and management