DON LTD REMPT LTD 2015 2016 2017 2018 2015 2010 2017 2018 Ratios Current ratio 1.9 2.1 1.85 1.6 2.2 2.4 2.3 2.4 Quick Assets ratio 0.81 1.3 1.02 0.82 0.? 0.68 0.63 0.59 Operating Cash Flow ratio 0.72 0.54 0.54 0.43 0.48 0.46 0.41 0.39 Days in Receivables 45 51 53 58 53 58 61 65 Inventory Turnover ratio 38 41 40 50 30 34 33 40 Days in Payables 45 56 53 67 45 61 67 70 Debt to Equity ratio 0.68 0.64 0.54 0.51 0.6 0.58 0.55 0.49 DON LTD and RUMPT LTD are two companies engaged in the retail of sportswear. 'Ihey have approached our audit firm Pran 8: Partners (Chartered Accountants) to audit their nancial statements for the nancial year ended 30 June 2018 and which we have accepted. You are the audit senior of Pran 8: Partners (Chartered Accountants) and are responsible to provide a report to the Audit Manager on the risks related to these two new clients. The data above is a summary of the preliminary analytical review results conducted by an audit trainee for the two client companies for four years. Some of these key ratios are important to identify and assess risk(s) related to the audits of these two clients. Required: Provide a detailed report to the Audit Manager covering the following questions: (1) Discuss the importance of risk identication and assessment for both companies. {3 marks} (2) Based on the ratios analyses calculated by the audit trainee, identify the areas in the nancial statement where you believe there are risk concerns. Also state whether the risks relate to control or inherent risk or both. Provide reasons for your choice. (10 (3) State and explain which management assertion(s) are at risk. ( 4 marks) (4) Advise on the audit strategy to be used in carrying out the audit of these two companies. ( 3marks) Please note your report to the Audit Manager MUST address ALL of the questions (Maximum Words Limit 1000). Instructions to Students on Assignment 2 Students are required to pay attention to the following points when uniting their answers