Metro Holdings (Metro) was founded in 1957 and has been listed on the Mainboard of the SGX-ST since 1973. It started out as a textile store and has 'grown over the years to become a property investment and development group with a broadened and diversified asset portfolio, backed by an established retail track record, with a turnover of S$210.3 million and net assets of S$1.5 billion as at 31 March 2020'l. Imagine you are the Audit Senior with Chu & Chu Assurance LLP, an audit firm that was recently appointed as the independent auditor of Metro. You are currently planning for the audit of Metros financial statements for the financial year ended 31 March 2020. The key sources of information you have of Metro, that will help you in the audit planning, would be public announcements of the company (available on the company's and SGX websites), news reports, annual report of the company for the last financial year and quarterly announcements of the company. Use the following link to access the FY2020 annual report of Metro. https://www.sgx.com/securities/annual-reports-related-documents The audit planning phase includes procedures such as gaining an understanding of the client and its business, making risk and materiality assessments, determining an audit strategy, and determining the type of evidence to collect, based on the risk levels. Having gathered information about Metro, you proceed to perform a risk assessment about the Group and its environment. Risk Assessment procedures Management, Business and Account risks SSA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment requires the auditor to perform risk assessment procedures to provide a basis for the identification and assessment of risks of material misstatement at the financial statement and assertion levels. (a) Research the retail industry that Metro operates in. Using the information researched, identify and explain THREE risk factors affecting the retail industry in general. (12 marks) (b) You are now assessing the risks of material misstatement at the assertion levels of the following accounts. In relation to Metro's business, for EACH of the account, identify and explain TWO assertions that face higher risks of material misstatement. (i) Revenue (ii) Inventories (iii) Borrowings (iv) Investment property (24 marks) 1 Source: Metro Holdings Annual Report 31 March 2020. Preliminary Analytical procedures SSA 315 A14. Analytical procedures performed as risk assessment procedures may identify aspects of the entity of which the auditor was unaware and may assist in assessing the risks of material misstatement in order to provide a basis for designing and implementing responses to the assessed risks. Required: Using the information found in Metro's Annual Report for the financial year ended 31 March 2020, (c) Calculate the following ratios, based on the Group's figures, for both FY2020 and FY2019: (i) Gross profit margin (ii) Net profit margin (iii) Current ratio (v) Debt Equity ratio (4 marks) (d) For each of the ratio above, explain why the ratio has increased or decreased. (12 marks) Metro Holdings (Metro) was founded in 1957 and has been listed on the Mainboard of the SGX-ST since 1973. It started out as a textile store and has 'grown over the years to become a property investment and development group with a broadened and diversified asset portfolio, backed by an established retail track record, with a turnover of S$210.3 million and net assets of S$1.5 billion as at 31 March 2020'l. Imagine you are the Audit Senior with Chu & Chu Assurance LLP, an audit firm that was recently appointed as the independent auditor of Metro. You are currently planning for the audit of Metros financial statements for the financial year ended 31 March 2020. The key sources of information you have of Metro, that will help you in the audit planning, would be public announcements of the company (available on the company's and SGX websites), news reports, annual report of the company for the last financial year and quarterly announcements of the company. Use the following link to access the FY2020 annual report of Metro. https://www.sgx.com/securities/annual-reports-related-documents The audit planning phase includes procedures such as gaining an understanding of the client and its business, making risk and materiality assessments, determining an audit strategy, and determining the type of evidence to collect, based on the risk levels. Having gathered information about Metro, you proceed to perform a risk assessment about the Group and its environment. Risk Assessment procedures Management, Business and Account risks SSA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment requires the auditor to perform risk assessment procedures to provide a basis for the identification and assessment of risks of material misstatement at the financial statement and assertion levels. (a) Research the retail industry that Metro operates in. Using the information researched, identify and explain THREE risk factors affecting the retail industry in general. (12 marks) (b) You are now assessing the risks of material misstatement at the assertion levels of the following accounts. In relation to Metro's business, for EACH of the account, identify and explain TWO assertions that face higher risks of material misstatement. (i) Revenue (ii) Inventories (iii) Borrowings (iv) Investment property (24 marks) 1 Source: Metro Holdings Annual Report 31 March 2020. Preliminary Analytical procedures SSA 315 A14. Analytical procedures performed as risk assessment procedures may identify aspects of the entity of which the auditor was unaware and may assist in assessing the risks of material misstatement in order to provide a basis for designing and implementing responses to the assessed risks. Required: Using the information found in Metro's Annual Report for the financial year ended 31 March 2020, (c) Calculate the following ratios, based on the Group's figures, for both FY2020 and FY2019: (i) Gross profit margin (ii) Net profit margin (iii) Current ratio (v) Debt Equity ratio (4 marks) (d) For each of the ratio above, explain why the ratio has increased or decreased. (12 marks)