Sugar Limited (SL) is a manufacturing company in Fiji. Your audit firm is the auditor of SL for the past two audits. You have been asked to conduct the audit for SL for the year ended 31 May 2021. During the review of accounts, you notice that SL has a loan of $3 million from the Bankof Fiji (a local commercial bank in Fiji). The full loan is repayable on 30 August 2022. Looking at the financial situation of SL due to COVID-19, you observe that it will be very difficult for SL to repay the loan and that SL needs to request for extension of repayment time from the Bank of Fiji. In addition, you notice that the loan agreement has several restrictive covenants. In events of a breach of the covenant, it gives the power to the Bank of Fiji to recall the loan amount immediately. A statement made by the financial controller of SL to you is that "based on the fact that the bank has not recalled or demanded the loan money, it provides a strong ground to believe that there have been no breaches to the covenants during the year".

REQUIRED: How will you together with your audit team going to exercise professional scepticism concerning the claim of the financial controller?

word limit : 210 maximum words