Identify and provide valid audit procedures addressing each of the significant accounting issues and the risks they pose.

1.Matchmaking revenue Rico is excited about the revenues that Orion generated during its first year of business. The main revenue source is a matchmaking service for clients seeking a romantic relationship. New clients sign a contract and pay an up-front fee of $1,200, which is deferred and recorded evenly over 12 months. The fee is payable upon initial consultation, at which time Orion helps the client create a personal profile and record a video for potential dates to view. Clients have regular contact with Orion staff to view videos of potential matches and discuss their progress over a 12-month period. At the end of the year, if clients have still not found a match, they can request a refund of 25% of their fee. If they find a match before the 12 months is up and leave the program, they do not receive a refund. However, they may return within the 12-month period if the relationship ends. Client sign-ups for the matchmaking service began in January of 20X1 and have occurred evenly since, with 400 customers enrolled. So far, 150 of the customers have entered a long-term relationship and have happily left the program.

2.Capital assets Leases In June 20X1, Orion leased a truck for four years at 0% interest, for a monthly payment of $792. If Rico is happy with the trucks performance, he will consider purchasing the truck at the end of the lease for the buyout amount of $40,000, as he would expect it to meet his needs for at least 10 years. The $40,000 is representative of what the fair value of the truck is expected to be at that time. Lease payments have been expensed in the financial statements. If the truck had been purchased for cash, the price would have been $65,000.