Audit presentation

Hi everyone - I would like to ask about help - I have some idea but I am not sure that I am right.

I have some information ( look below)

The following additional information is provided:

1. (i)The company is a subsidiary of an American group which is quoted on the New York stock exchange.
2. (ii)Your firm provides a clearance report to your firm's New York office as well as an audit report on the
3. statutory financial report of the Australian subsidiary.
4. (iii)The company manufactures carpets. Approximately 80 per cent of the company's sales arise as a result of exports. Where the company sells abroad the customers are invoiced in the currency of that country.
5. (iv)The primary raw material used in the manufacture of the company's product is wool which is purchased in Australia. You have been informed that the company's profitability has improved due to the recent slump in wool prices.
6. (v)With the exception of the managing director, Mr L, an American executive, all of the local management are Australian. Mr L is on a five-year secondment from the United States parent company. He has a reputation for delivering results from subsidiaries which have not performed well in the past. It is his intention to return to the United States company in a year's time as a director.
7. (vi)In the past you have found the financial controller, Mr C, to be competent in day-to-day accounting issues but somewhat lacking in assessing the 'broad picture'. Both management accounts and statutory financial reports are subject to Mr L's approval. He frequently insists on adjustments to the draft financial report.
8. (vii)The United States parent's management was dissatisfied with the company's 2013 result and has paid close attention to the company's performance during 2014.
9. (viii)The company operates a standard costing system and the finished goods inventory is valued at standard cost. Raw materials are valued at actual invoiced cost. Due to the Christmas shutdown no work in progress exists at year end.
10. (ix)During 2014 production has been increased by 10 per cent compared with 2013 levels. This has resulted in favourable absorption variances which have contributed to the improved profitability during 2014.
11. (x)Tests on the company's inventory and trade receivables internal controls in prior years have shown the system to be reliable. The systems are capable of producing reports on the ageing of inventory and trade receivables and the sales history of individual product lines.
12. (xi)Approximately 80 per cent of the company's trade receivables are overseas customers and the debt is denominated in foreign currency. Most of these customers are on 60-day credit terms.
13. (xii)Midway through the financial year the previous credit controller resigned. His replacement, Mr B, was appointed six weeks later.
14. (xiii)Mr B has informed you that a number of customers have complained about product quality problems.
15. (xiv)An analysis of the company's property, plant and equipment (PPE) is as follows:
16. 2014 $000
17. Property factory building27,000Plant and equipment (including vehicles)1,763 28,763
18. (xv)Additions and disposals of fixed assets during 2014 have not been significant. The factory was acquired six years ago. Since that date no independent valuation has been carried out. Mr L has assured you that the current market value of the property is not less than $27 million.
19. (xvi)Bank borrowings are secured by a fixed charge over the company's buildings. A loan repayment of $5 million due on 30 November 2014 was reduced to $500,000. Mr L has stated that this was done with the agreement of the bank and that the bank is comfortable with the company's performance, and points out that the company has made all of its interest payments on time.
20. (xvii)The non-current receivable is an Export Market Development grant.
21. (xviii)In prior years, no serious differences between the auditors and management arose. The audit has
22. always been completed on time and an unmodified opinion issued.

(xix)You have just received a memo from your New York office stating that due to the client's head office management's desire to issue the results of the group earlier this year they will require clearance on the Australian company's financial report by 18 January 2015. For the 2013 year clearance was given on 30 January 2014.

the question

1. Identify the key risk factors which will impact on the audit of trade receivables and inventories. ( I think that risk can be foreign currenc exchange risk, market risk (- change in wool price for example by government )
2. What other risk factors will impact on the audit? inform in point 12 can be risky factor

Thank you for help. Have a nice day