Bottom Down Electronics Limited is a designer of high technology healthcare equipment. For the current financial year the CFO of Bottom Down Electronics Limited reported the following key account balances: (a) Sales Revenue - $111 million; (b) Gross Profit - $65 million; (c) EBIT - $43 million; (d) NOPAT - $5 million; (e) Total Current Assets - $8 million; (f) Total Net PPE - $60 million; (g) Total Assets - $250 million; (h) Total Current Liabilities - $15 million; (i) Total Interest-Bearing Debt - $185 million; and (j) Total Equity $15 million.

Lazy Auditing Services has been the auditor of Bottom Down Electronics Limited for the past 4 years and were recently reappointed to audit the financial statements for the current financial year.

Required: Consider the following scenarios independently to determine the type of risk best relevant to the situation description and justify your answer. Provide your answer in the template:

audit opinion and justification of 3 scenarios

1- Test-of-transaction evidence gathered by Lazy Auditing Services, involving a sample of 50% of all sales, found concerns with only several transactions. Discrepancies between company and auditor computations of these transactions amounted to $10,000. During the cause of the audit, the audit team were able to complete all planned tests-of-controls, tests-of-transactions, and tests-of-balances.

2-The audit team leader noted that an escalating global financial credit crunch see interest rates rise dramatically during the next 12 to 24 months to record levels. This will place pressure on highly indebted firms to survive. The audit team leader also noted the audit team were able to complete all planned tests-of-controls and tests-of-transactions during the current year audit. However, the audit team could only complete about 97% of planned tests-of-balances.

3-The audit team were able to complete all planned tests-of-controls, tests-of-transactions, and tests-of-balances. The evidence collected from these tests did not highlight any obvious errors. However, the audit team leader reported Bottom Down Electronics Limited had introduced a new sales revenue recognition model during the year. This revenue recognition revenue approach did not conform with existing standards, norms, and practices. The new revenue recognition model meant $90 million of sales revenue that would have been recorded in future years (under the traditional accepted