During the month of March, TBL signed contracts with some

of its customers to supply toys of $300$ or more per month. The

contract with the supermarket chain allows a credit period of

$60$ days compared with $30$ days for all other customers.

Phillip believes that he needs to conduct extensive analytic

procedures on accounts payable, receivables, and revenue for

March because of the new contract. He obtained the financial

statements and transactions for March to conduct the analysis.

The materiality level for the income statement account is

$$15,000$ and tolerable error as a percentage of the materiality

level is $50\%.$ Based on Phillip's extensive knowledge of the

client, he believes that the internal control systems established

by management have been deteriorating as there have been

several changes to key management personnel during the

period under review. The company's controller resigned in

March so Phillip knows that he will have to conduct an

extensive trend analysis for March.

Requirements:

Conduct of review of the interim financial statements

$($i$)$ Prepare an engagement letter for the interim financial

statements

$($ii$)$ Prepare an audit plan

$($iii$)$ Prepare internal controls and risk assessment

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