ONE (a) Triangulation Ltd is a rapidly growing merchandising entity in the UK dealing in online or on-the-store sales of designers' fashion, home furniture, food & groceries, and electronics. The fashion business on average has been contributing about 30% of the entity's revenue because of high demand by celebrities. However, inventories have built up due to the economic downturns facing many celebrities and a significant part of the trade receivables from the fashion business is attributable to those celebrities. Sales growth in the other businesses has remained relatively consistent with management expectation. The company had four branches/outlets in South and Midland England at its financial year end of 31 December, 2015. Due to the rapid growth and high demand of the entity's products from all parts of the UK, Triangulation Ltd increased its branch network as at its 2016 financial year-end to six new locations in the UK (one in Wales, two in Northern England, two in Scotland and one in Northern Ireland). In 2015, the shareholders voted to quadruple directors' earnings and bonuses over the next four years if they could aggressively extend the entity's branch network to twenty (20) given its prosperous economic outlook and position in its industry. The entity purchases its inventories from key suppliers in Bangladesh and Ghana because of low cost advantage and the delivery time takes about one month from the date a purchase order is made. The finance director has told the auditor that the increase in the revenues of the electronic business more than offset the decline in the fashion business. However, 50% of the electronic revenue resulted from sales to Morgan Electronic Magic, which is wholly owned by Triangulation Ltd. Required: Identify FOUR audit risks and explain how you would respond to them as an auditor in planning the audit of Triangulation Ltd. (Use a table to organise your answer into audit risk and auditor's response) (16 Marks) (b) Triangulation Ltd reported an overdraft figure of 3m in its 2015 financial statement, which made its current ratio stand at 0.8:1 compared to its industry's 1.2:1. The overdraft facility has now been reclassified as a 10% long-term loan repayable on 10 equal instalments over a ten-year period from 2016 financial year, thus making the entity's current ratio to be 1.4:1 compared to the 1.3:1 industry average. Required: (i) (ii) Highlight TWO internal and ONE external audit evidences that might give the auditor some satisfaction/comfort on the veracity of this transaction. (6 Marks) Why might the auditor place greater reliance on external evidence in this context? (3 Marks) (c) ISA 315 highlighted five broad elements that make up internal control system. Enumerate these elements