QUESTION 3 35 MARKS You recently completed your studies and started with your auditing articles at Pink Ladies Auditors (Pty) Ltd "Pink". You will be the First-Year Trainee on the audit of Body-wise (Pty) Ltd "Body-wise". This is also the first year that Pink performs the audit of Body-wise. Background Information Body-wise has a year-end of 28 February 2022 and is listed on the Johannesburg Stock Exchange (JSE). Body-wise sells fast-moving consumable goods (specifically relating to healthy living products) and has recently started selling via an online platform. The firm's operations are decentralized as they have 10 warehouses across South Africa with the Head Office located in Cape Town. Body-wise buys their products locally, but often import products as well depending on the exchange rate, cost price, and bulk discounts offered by the supplier. Revenue also comprises of sales made to both local and foreign customers. Foreign customers are invoiced in their respective currencies. During the year, Body-wise entered into a forward exchange contract for the goods Body-wise sold to one of their once-off foreign customers to protect itself against foreign currency fluctuations. Normal credit terms are 45 days after the invoice date and Body-wise provides for doubtful debts at 5% of the trade receivables balance. Management of Body-wise receives bonuses based on the profit for the year. At year-end, trade receivables were factored to a third party to provide Body-wise with the initial cash flow that was required for body-building product exports. To further finance expansions into Africa, Body-wise applied for a bank loan. Approval of the loan is pending, subject to the completion of the audited 2022 financial statements.