Question 2 (8 marks)

You are the auditor of Brand Boy Ltd (BB). BB manufactures mini hi-fi systems. BB's draft financial information for the year to 30 June 2021 is as follows:

2021

2020

Draft

Actual

$000s

$000s

Revenue

5 267

4 122

Cost of sales

(2 519)

(2 290)

Gross profit

2 748

1 832

Operating expenses

(1 718)

(958)

Profit before interest and tax

1 030

874

Cash

527

Trade receivables

931

587

Inventory

481

366

Bank overdraft

206

Trade payables

366

275

Required:

Based on above informationidentifyfour (4) audit risks which would impact on the audit of BB. You also need to include theaccount and assertionmost affected by the risks identified.