Answer the following questions based on the information presented for Cloud 9 in the appendix to this text and the current and earlier chapters. You should also consider your answers to the case study questions in earlier chapters.

The trial balance for Cloud 9 as at September 2016 is included in the appendix. Note the following when analysing the company:

The current and non-current assets and liabilities for 31 December 2015 are shown in the balance sheet. In the trial balance, non-current assets are Property, Plant and Equipment, and Deferred Tax. The non-current liabilities are Provisions $110 744 (other Provisions are current liabilities), Interest Bearing Loans ? Loan with Bank $850 000 (the remainder of the balance of this account is a current liability), and Provision for Deferred Tax Liabilities $352 231.

Where a ratio requires an average balance and the prior year is not available, use the current year only.

Items of revenue and expense in the trial balance for September 2016 should be annualised where appropriate.

(a) Using analytical procedures and the information provided in the appendix, perform an analysis of Cloud 9's financial position and its business risks. Discuss the ratios indicating a significant or an unexpected fluctuation.

(b) Which specific areas do you believe should receive special emphasis during your audit? Consider your discussion of the analytical procedures results as well as your preliminary estimate of materiality. We need to make a memorandum to Suzie Pickering outlining potential problem areas (that is, where possible material misstatements in the financial report exist) and any other special concerns (for example, going concern).