Audit

You are the senior auditor responsible for the audit of PackItAll Ltd, a packing material manufacturer. You are currently planning the audit for the year ended 30 June 2022, and you have noted the following matters:

i. PackItAll Ltd has been profitable for several years.

ii. PackItAll Ltd has recently successfully expanded its operations to manufacture a new type of packing material using recycling material for packing the fragile products. They already secured a 5 year contract for export of this new packing material to a large New Zealand company.

iii. International competition in the industry is becoming more intense, with some of PackItAll Ltds current customers indicating they may now purchase their packing material from Korean suppliers at a much lower cost.

iv. PackItAll Ltds debt has remained constant in recent years and it has a positive working cash flow position as at this Financial Year.

v. One of the major customers of PackItAll Ltd with around 30 per cent of PackItAll Ltds annual sales, mentioned that it has started to manufacture their own packing material.

Required:

a) From the information noted above, identify any three (3) events or conditions that may indicate material going concern uncertainties.

b) Identify any three (3) mitigating factors that nullify any going concern uncertainties identified in the requirement a (a) above.