Kyrgyz Syut LLC is a dairy producer that has entered into an agreement with you to audit the financial statements for FY2019. By the end of 2019, you were informed of the following facts:

Revaluation of fixed assets

At the beginning of 2019, the company's management conducted an annual review of the cost of production equipment and decided to update its market value by revaluation. The CEOs wife owns her own appraisal company, and in connection with this, it was decided to conduct revaluation of the assets using her company. Revaluation took place in July 2019. (5 points)

Inventory

At the end of the year, stock count was organized at the central warehouse of the company, and you have attended this stock count. It turned out that the accounting of work-in-progress and finished goods is carried out correctly. The balance of both types of inventories is material for the financial statements of Kyrgyz Syut LLC. Stage of completion, quantities during the stock count were also recorded correctly.

Nevertheless, during the stock count a batch of expired cheeses, with indication of being rotten, was found, totalling USD 50 thousand. The head of the sales department offers to sell this batch for 10 thousand US dollars. (6 points)

Bank loan

Kyrgyz Syut LLC took a loan in 2017 for 4 years, for a total of $ 1 million, with monthly payments of $ 20 thousand per month, and payment of the bulk of the debt at the end of the term under a loan agreement, in the amount of $ 40 thousand. In July and August 2019, 2 monthly payments were overdue. (4 points)

Required:

A) Describe substantive procedures that should be conducted to obtain sufficient and appropriate audit evidence for the circumstances described above. Note: for each circumstance, the number of maximum possible points is presented above.

B) Describe the substantive procedures for assessing the ability of Kyrgyz Syut LLC to continue its continuous operations for the foreseeable future.