EXHIBIT 2 Audit Team Planning DiscussionRevenue Process BES Associates January 07, 2019 Audit Team Planning DiscussionRevenue Process Attendees: Juan Garrido (Staff), Bruce Allen (Senior), Cynthia Waters (Manager), Mary Liu (Partner). On Monday, January 7, 2019, the audit team of Southern Industries met to discuss the potential risks in the revenue process for designing our substantive testing procedures. The following bullets summarize the main points made by the audit team: SI is only in its second year of operations and continues to be in a net loss position; SI has hired many new accounting staff in the past year; SI has no formal control processes. Many of the financial reporting processes at SI are manual, relying on employees to perform manual inspection of documents to determine relevant accounting information; Commercial-grade customers require a customer acceptance provision. These provisions could delay the recognition of revenue until SIs customers formally accept the goods. No formal processes exists between SIs accounting department and sales department to relay a customers formal acceptance of goods; and SI records revenue for consumer- and commercial-grade customers on delivery based on the shipping terms. Adjustments to commercial-grade customers are made in the event of a failed inspection or return. Based on these risks, the audit team has decided to set the following risk assessments: Control Risk: HighThe client has no formal control policies or procedures. Many processes at SI are manual; Inherent Risk: HighThe client is in its second year of operations and continues to post a net loss. Revenue recognition for commercial-grade customers requires a customer acceptance provision, increasing the risk of improper revenue recognition; and Planned Level of Detection Risk: LowRisk of material misstatement for the revenue process has been assessed as high. We will adjust the nature, timing, and extent of substantive tests to reduce the audit risk to an acceptably low level.

This question is for Audit /Accounting