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Question 5 9 Marks You are engaged as an audit senior in the public auditing firm of Bella Partners. As part of the planning process for the audit of Brown Ltd for the financial year ended 30 June 2019, you requested the minutes of the Board of Directors meetings for the financial year and noted the following: Extract from Board of Directors Meetings for the year 2018-19 Date of Meeting 1/9/2018 The board agreed that in order to attract new customers and therefore increase sales, any new customers from 1/9/2018 onwards would receive three months credit before their debt becomes overdue, rather than the one month credit previously allowed. 1/11/2018 The board agreed that a new 'bonus scheme' would be implemented from 1/11/2018, which would provide directors with a 5% bonus on profits if they could exceed last year's profit by 20%. 1/6/2019 The board agreed to revalue land and buildings upwards by 50% in the financial statements at 30/6/2019, in accordance with a property valuation undertaken at the company's request. Required: For each of the three situations above, discuss the potential risk of each item and the impact each may have on your audit plan for the year ended 30 June 2019. 1/9/2018 (a) Risk: Impact: (1.5 +1.5 marks = 3 marks) Question 5 continued over next page Question 5 continued (b) 1/11/2018 Risk: Impact: (1.5 + 1.5 marks = 3 marks) (c) 1/6/2019 Risk: Impact: (1.5 + 1.5 marks = 3 marks)