Question 4 (25 marks) (a) Financial statements often contain material balances recognized at fair value. Required: Explain to what extent the fair values would give rise to additional audit risks. [8 marks] (b) You are the manager responsible for the audit of Price Co, a wholesale company with a year ended 30 June. In the last financial year, the senior auditor has noted that the company made acquisition of several investment properties, using the surplus funds, with the objective to generate rental income. The properties have been revalued at the Page 4 of 5 Advanced Auditing - ACF3003 (5) year ended 30 June 2018 and they are recognized on the statement of financial position at a fair value of Rs 265m, and the total assets of Price Co are Rs 5.28 billion at 30 June 2018. An external valuer has been used to provide the fair value for each property. Required: (i) Recommend the matters, with justifications, to be considered in respect of the external valuer prior to placing any reliance on their work. [10 marks] Critically appraise the audit procedures to be performed on the valuation of the investment properties (IAS 40). [7 marks)