Question 3 9 pts You are planning the audit of Green Pty Ltd (Green). This is the fifth year you have audited the company's financial statements. Green is a national book-seller with its head office in Adelaide and shops in all capital cities. During the time you have audited Green, its inventory turnover ratio has been stable and similar to that of the industry. However, over the past twelve months it has deteriorated. The book-selling industry is changing, and now many firms, including Green are switching from predominantly face-to-face sales to on-line sales. Many of Green's suppliers, most of whom are overseas publishers, have recently required shorter payment terms and have eliminated volume discounts, thus placing pressure on Green's management of working capital. In an effort to free-up working capital, the directors of Green have changed the model of remuneration for senior management by reducing their base salaries, and offering generous bonuses where profit targets are met. When reviewing the working papers, you see that last year, your audit senior made a note highlighting an ongoing problem with the way in which Green accounted for lease outgoings. REQUIRED Identify three inherent risks that an auditor would take into account at the planning stage of the audit of Green. In your answer state the following: (1) The facts that suggest there is an inherent risk. (3 MARKS) (ii) The nature of the risk (e.g. management experience, knowledge and changes during the period) (3 MARKS) (iii) The level at which the risk arises (e.g. financial report or assertion)