Murphy Ltd Finally, Wayne tells you about Murphy Ltd, a large client with a diverse set of operations. During Wayne's audit of Murphy he found the following:

• Murphy manufactures wheat, yeast and various other goods needed to bake bread which it exports to bakers in Saudi Arabia. Recently the Saudi Arabian currency (Saudi riyal) has fallen in value and a number of Murphy's customers are unable to settle their accounts. By the end of the year, Murphy is expecting to have outstanding receivables in excess of $1 million.
• Murphy also manufactures soft drink. Part of Murphy's agreement with its distributors is that Murphy will supply fridges and advertising signs for the distributors to use. These fridges are rented to the distributors and recorded as fixed assets on Murphy's balance sheet. Most distributors are small retailers, such as petrol stations and convenience stores.
• Murphy has recently been finding it difficult to recruit and then retain skilled people to work in its factories. Consequently, senior management at Murphy have decided to implement a new bonus scheme. The method for allocating bonuses will be based on factors including length of tenure, pay rate, rank within the organisation and an estimate by senior management of the employee's contribution to the profitability of Murphy.

Question:

Regarding Murphy Ltd:

• Three (3) account areas that are at risk of material misstatement.
• For each account area identified above, one (1) key assertion that could be at risk.
• The audit procedures you would perform to gather sufficient appropriate evidence for each assertion.