Question 3 Case study (6 marks)

Wonder World is a theme park operated by an audit client of Wonder Partners. It is located on the Gold Coast and, due to its proximity to the ocean, the rides are prone to rust and corrosion. During the 2020 school holidays, two of the most popular rides experienced major breakdowns. Children were trapped on the rides for several hours, resulting in several being taken to hospital with minor injuries. An inspection following the incident revealed that key parts needed urgent replacement. The parts are made in the United States and imported by Wonder World. The cost of the replacement parts is $4.5 million (against profit after tax in the previous year of $400 million). The repairs are scheduled to begin in April, with completion in July 2020.

As doubts about its ability to operate in the current year spreads, Wonder World's share price has fallen over the last two years. The CEO and other senior management have large bonuses linked to both share prices and company profitability

Required

1. What concerns would the auditor consider during the audit?
2. How would you audit Wonder World's closing procedures?
3. What potential errors would be of most interest to the auditor? Explain.

Provide supporting ASA(s) or other references