3. Heal Sdn Bhd Heal Sdn Bhd, a limited liability company, manufactures various heating products which it sells to both High Street and catalogue retailers. The statement of financial position for the years ended 2022 and 2021 are set out below. Last year, materiality for the financial statements was set at $10,000. Non-current assets Tangible non-current assets Investments Current assets Inventory Receivables Cash in bank 2022 $'000 2021 $'000 $'000 $'000 52 78 Cash in hand 12 1 143 Total assets 20 2 165 179 136 34 1 350 21 22 373 2022 2021 $'000 $'000 $'000 $'000 Current liabilities Trade payables 121 133 Bank loan 5 5 126 138 Long-term liabilities Bank loan Provision* 20 25 Capital and reserves Share capital Reserves Total liabilities 2 2 (3) 208 165 373 *The provision of $20,000 consists entirely of a warranty provision Required a) Discuss whether the materiality level for the financial statements used in 2022 will be appropriate for this year's audit, giving reasons for your answer. b) Explain audit risk. (3 marks) (3 marks) c) Review the statement of financial position given above and state the areas in which audit work should be concentrated, giving reasons in each case. (14 marks) (Total = 20 marks) 4