QUESTION 2 Lorlornyo Co manufactures chemical compounds using a continuous production process. Its year end was 31 July 2021 and the draft profit before tax is GHS136 million. You are the audit supervisor and the year-end audit is due to commence shortly. The following matters have been brought to your attention. (i) Revaluation of property, plant and equipment (PPE) At the beginning of the year, management undertook an extensive review of Lorlornyo Cos non-current asset valuations and as a result decided to update the carrying value of all PPE. The finance director, Michael Batmann, contacted his brother, Martin, who is a valuer and requested that Martins firm undertake the valuation, which took place in August 2020. (4 marks) (ii) Inventory valuation Your firm attended the year-end inventory count for Lorlornyo Co and ascertained that the process for recording work in progress (WIP) and finished goods was acceptable. Both WIP and finished goods are material to the financial statements and the quantity and stage of completion of all ongoing production was recorded accurately during the count. During the inventory count, the count supervisor noted that a consignment of finished goods, compound E243, with a value of GHS720,000, was defective in that the chemical mix was incorrect. The finance director believes that compound E243 can still be sold at a discounted sum of GHS400,000. (5 marks) (iii) Bank loan Lorlornyo Co secured a bank loan of GHS26 million on 1 October 2019. Repayments of GHS200,000 are due quarterly, with a lump sum of GHS800,000 due for repayment in January 2022. The company met all loan payments in 2020 on time, but was late in paying the April and July 2021 repayments. (3 marks) Required: (a) Describe substantive procedures you will perform to obtain sufficient, appropriate audit evidence in relation to the above three matters. Note: The mark allocation is shown against each of the three matters above. (b) Describe SIX procedures which the auditor of Lorlornyo Co should perform in assessing whether or not the company is a going concern. (3 marks)