Luxury Furnitures best-selling chaise lounge collection has been experiencing a high level of returns owing to suspected spring issues. Based on closing inventory, inventory turned over an average of 5.2 times last year (20X2) compared to 4.1 times this year (20X3). Luxury Furniture has recently won a tender to supply a 5 star hotel with various furniture needs. In order to win the tender and prevent competitors from supplying furniture to the hotel, Luxury Furniture agreed to supply the items at 15 per cent below their cost price. The first set of furniture items are due to be delivered to the hotel in the middle of July 20X3.

Identify key account balances from the information provided that are subjected to an increase in audit risk. Briefly explain what factors increase the audit risk associated with the account balances identified. In your explanation, please mention the key assertion(s) at risk of material misstatement for each account balance identified.