Greenbuilders Pte Ltd (GPL) is a local construction company which specialises in providing bespoke Design and Build construction services for private residential homes that are designed to be environmentally friendly. Due to the niche market GPL caters to, demand for such homes usually come from the more affluent class in Singapore. You are an audit senior conducting an audit on the company for the year ending 30 June 2022.

The war between Russia and Ukraine has resulted in rising labour and material costs in the construction industry. As the country has opened up its borders, the construction industry still faces a labour crunch and rising costs from the ongoing Covid situation and aftermath of the geopolitical impacts.

During the course of your audit, the following information was documented following initial discussion about the valuation of the office building property with the Finance Director:

The office building is not located in a prime area but it still attracts some tenants. The Finance Director noted that valuation of the property performed by professional valuers in the past have been consistent and on that basis, has applied the same valuation as 2021 but applied a 10% haircut to be conservative given the pandemic situation. The Finance Director believes this to be a fair valuation of the property.

From the valuation of the office building property process, the following are required:

• Assess and discuss one (1) inherent risk,
• Evaluate one (1) risk of material misstatement (RMM) related to the inherent risk, analyse one (1) key control that GPL should implement, and assess one (1) substantive procedure
• Discuss one (1) corresponding management assertion that you will be most concerned with.