C3. You are an audit manager for Oxon and Co (Oxon), a firm of Certified Chartered Accountants based in Oxford. Oxon are external auditors for Green Co, a company which sells drills and other similar equipment to high street home improvement stores. Its year end is 30 September 2020 and the draft total assets are 38.4 million and profit before tax is 4.7 million. Green Co sources the goods and distributes them to their customers. It does not manufacture any products. The year-end audit is due to commence shortly and the following issues have been brought to your attention. Delivery vehicles During the year ending 30 September 2020, Green Co replaced all its delivery vans with energy efficient hybrid vans. The old vans were purchased for a total of 200,000 and had an accumulated depreciation of 117,000. a) Describe three substantive procedures Oxon should perform to obtain sufficient appropriate evidence in relation to the disposal of the old delivery vans including reasons for why each procedure is required. 6 marks Inventory valuation Oxon attended the year end inventory count for Green. The inventory balance is material to the financial statements. During the count, the auditor attending noticed that there were a significant number of old inventories gathering dust in one area of the warehouse. When asked, the warehouse manager informed the auditor that they were all unused inventory which had been replaced with newer models. The directors are still hopeful to sell the inventory onto a discount store at a reasonable price. b) Describe three substantive procedures you should perform to obtain sufficient appropriate evidence in relation to the year-end inventory valuation including reasons for why each procedure is required. During the audit, the team has identified that the old inventory from the inventory count at the year-end is still in the warehouse and no buyer has been found. The directors are still adamant that the inventory should not be scrapped as they will find a buyer soon. The directors have strongly indicated that they do not wish to amend the financial statements. c) Explain the steps Oxon should now take and the impact on the auditors report in relation to the directors refusal to amend the financial statements