Glo-Warm Co, a limited liability company, manufactures various heating products which it sells to both High Street and catalogue retailers.The balance sheets for the years ended 2007 and 2006 are at $10,000.Non-current assetsTangible non-current assets InvestmentsCurrent assetsset out below.Last year, materiality was set2006 179 136 34 1 3501335 138Inventory 52 Receivables 78 Cash at bank 12 Cash in hand 120 216520 202 (3) 165Total assetsCurrent liabilitiesTrade payables 121 Bank loan 52007$'000$'000 $'000$'00021 237325 -2 208 37315Marks 143 Long-term liabilitiesBank loan Provision*Capital and reservesShare capital ReservesTotal liabilities126 *The provision of $20,000 consists entirely of a warranty provision.Required(a) Without carrying out any calculations, discuss whether the materiality level used in 2006 will be appropriate for this year's audit, giving reasons for your answer.(b) Explain audit risk.(c) Review the balance sheet given above and set out the areas in which audit work should be concentrated, given reason in each cases

Question - 1 15Marks Glo-Warrn Co, a limited liability company, manufactures various heating products which it sells to both High Street and catalogue retailers. The balance sheets for the years ended 2007 and 2006 are set out below. Last year, materiality was set at $10,000. 2007 2006 5'000 5'000 S'OOO 5'000 Nan-current assets Tangible non-current assets 20 21 Investments 2 2 Current assets Inventory 52 179 Receivables 78 136 Cash at bank 12 34 Cash in hand 1 1 143 350 Total assets 15: 313 Current liabilities Trade payables 121 133 Bank loan 5 S 126 138 tong-term liabilities Bank loan 20 25 Provision\" 20 Capital and reserves Share capital 2 2 Reserves (Si 208 Total liabilities 165 373 *The provision of $20,000 consists entirely of a warranty provision. Required (3) Without carrying out any calculations, discuss whether the materiality level used in 2006 will be appropriate for this year's audit, giving reasons for your