Assume that all potential ethical threats have been mitigated and your firm has accepted Magic Natural Ltd as an audit client. Consequently, Richard Craig has asked you to plan for the audit of MN for the 2021 financial year. You need to perform a risk assessment outlining potential risks of material misstatement in this audit. Please note that the risk assessment is based on the information provided in the case study above as well as the companys financial statements provided to you in the Excel file. Your risk assessment must cover the following:

a) Identify and analyze ten risk factors (conditions) that indicate a risk of material misstatement. (Please link the narratives of the company with financial statements when appropriate)

b) Explain which account and assertions might be misstated due to each risk factor.

c) Determine the audit strategies or procedures that may address the risk of material misstatement. Use the following format to present your answer

Use the following table format to present your answer from 1-10:

B D 1 Magic Hatural Limited 2 YORKING TRIAL BALANCE - BALAHCE SHEET 3 BALANCE DATE 31/03/2021 4 Per Per 5 Boots Audit 6 31/03/2021 31/03/2020 7 ASSETS $ $ 8 101 Auckland City Bank 289,027 199,352 9 103 Petty cash 5,437 5,200 10 105 Accounts receivable 110,580 124,021 11 106 Provision for doubtful debts 18,515 10,485 12 109 Inventory 768,673 817,152 13 110 Prepayment 46,392 36,438 14 112 Investment 8,400 6,125 15 113 Patent - Smooth Recovery 150,000 150,000 16 114 Amortisation 45,000 40,000 17 115 Property Plant & equipment 4,755,426 4,531,356 18 116 Accumulated depreciation 383,050 316,661 19 201 Development X3 1,069,827 20 Total assets 6.757.197 5.502.498 21 LIABILITIES 22 301 Accounts payable 198,830 223,161 23 302 Accrued PAYE 34,768 35,608 24 303 Wages and salaries payable 35,650 26,165 25 305 Acorued interest 25,333 35,485 26 306 Dividends payable 15,725 15,725 27 308 Loans - short term 75,000 50,000 28 401 Loans - long term 1,400,000 75,000 29 Total liabilities 1.785,306 461,144 30 OYHERS' EQUITY 31 501 Share capital 2,925,000 2,925,000 32 505 Other contributed capital 220,927 491,270 33 601 Retained earning 1,544,258 1,429,164 34 605 Dividends 15,725 15,725 35 Retained earning -current yea 297,431 211,645 36 Total ouers' equity 4,971,891 5.041.354 37 38 Total liabilties & ouers 6.757.197 5,502,498 BS P&L AR aging 1 2 4 5 6 7 9 10 11 12 13 14 15 16 17 18 B D Hagic Natural Limited YORKING TRIAL BALAHCE - IHCOHE STATEHEHT For the year eaded 31 March 2021 Per Per Books Audit Account 31/03/2021 31/03/2020 Retence $ $ 701 Sales 3,453,024 2,716,489 703 Sales returns & allowances 31,110 26,530 Het sales 3.421.914 2,689,959 Expenses 801 Cost of goods sold 1,803,479 1.420,933 Gross Profit 1,618.435 1,269.026 Operating Expenses 820 Wages 617,086 477,815 821 PAYE 64,716 52,712 822 Depreciation & amortisation 428,050 356,661 823 Rental 11,738 10,750 824 Legal fees 17.735 11,603 826 Advertising 28,870 27,313 827 Insurance 30,413 25,737 828 Repairs and maintenance 19,560 17,869 829 Power 18,675 13,463 830 Rate 12,700 10,670 831 Professional fees 13,100 11,875 832 General expenses 3,595 2,320 833 Bad debts 12,790 9,925 834 Freight and transport 33,714 28,150 Total operating expenses 1.312.742 1,056,863 Het income from operation 305,693 212.163 OTHER INCOHE AHD [EXPEHSE] 901 Interest expense 45,916 27.500 910 Gain[loss] on sale of investments 32,219 920 Income from investments 5,435 8,344 930 Gain[loss) on sale of fixed assets 18,638 Total other inconelloss 8.262 518 met income before tar 297.431 211,645 20 21 22 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 BS P&L AR aging G H B D E F 1 2 Aged Account Receivable 3 as at 31 March 2021 4 Product Line A 5 Customer Current 31-60 days 61-90 days 91-120 days older Total 6 Alpha 5000 530 5530 7 Beta 9600 3100 12700 8 Gamma 3500 1443 4943 9 Delta 2480 740 3220 10 Epsilon 3400 650 4050 11 Zeta 6320 6320 12 Eta 8200 3210 245 11655 13 Theta 963 687 1650 14 Lota 4398 357 249 5004 15 Kappa 874 874 16 Lambda 7800 623 8423 17 Total 49135 8906 1342 3649 1337 64369 18 19 Product Line B 20 Customer Current 31-60 days 61-90 days 91-120 days older Total 21 Mu 426 580 1006 22 Nu 340 865 1205 23 Total 766 865 580 0 0 2211 24 25 Total trade receivables 66580 26 27 28 20 BS P&L AR aging + Identify and Which account and assertions Audit strategies or procedures to analyse the risk might be misstated. (b) address the risk of material factor (a) misstatement (c)