Hadi is an audit partner of Fina & Co. medium audit firm based in Ipoh, Perak. He is in the middle of considering an appointment as auditor for MG Sdn Bhd. The company main operation is textiles. Due to Covid-19, huge setback of financing hit the company. Albert Tan, CEO of MG Sdn Bhd strives to obtain the leading market share of industry sales. Management and salesperson are compensated based on achieving this goal. Unfortunately, Albert Tan realizes that the performance measure was unrealistic during current economic situation. COURSE CODE/ COURSE NAME DIET (MONTH/ YEAR) 5 Hadi had performed preliminary analytical procedure on the financial statements of MG Sdn Bhd. The detail is as follows: 2020 2021 Inventory turnover ratio 3.5 2.3 Days to sell inventory 140 days 160 days Account receivable turnover 8.4 10.9 Days to collect receivables 60 days 87 days In addition, Hadi has reviewed the Internal Audit Report and there were matters that might affect the work of external auditors. This matters has been discussed with Jessica, Chief Audit Executive of Audit Committee. Hadi discovered an instances sales recorded that does not exist. Additionally, there are several complaints from customer on the late issuance of official receipt of cash paid. This matter had been highlighted to Chairman of Audit Committee, Vincent. However, Vincent who is Jessica husband ordered Jessica to drop and no further investigation done regarding this matter. Hadi has contacted Albert Tan to get further clarification regarding this matter. The feedback received was not expected. In addition, Albert Tan did not encourage Hadi to contact previous external auditor to gain any information regarding this matter. The financial statement of MG Sdn Bhd has not been audited for two consecutive years.

a. Assess the audit procedures that Hadi and his team shall perform to obtain sufficient and appropriate audit evidence in relation to the revenue and inventory balance.

b. Assist Hadi to identify the indicators that lead to high audit risk and distinguish the auditors response in planning for audit for MG Sdn Bhd