The Audit Manager (Camille) has also prepared the following information for you to read in preparation for the audit engagement: COVID19 had hit Merivale hard. Closures due to lockdowns, especially in Melbourne, made trying to manage the business very unpredictable. Merivale hire a significant number of temporary visa holders. They work in roles from restaurant managers to servers to kitchen staff. Measures that Merivale implemented during COVID19 included private dining events for limited patrons, luxury meal home delivery, online cooking classes, online cocktail making classes (which included a kit of cocktail ingredients delivered to your home). The business was eligible for JobKeeper and received it for 6 months. The business is focused on high margin, lower volume - a luxury and exclusive experience. To attempt to cut costs, many of their venues were shuttered/shut down and staff let go. Given most were casual and part time workers, redundancies were not offered. Full time salaried staff were put to work in other roles. Delays were arranged with landlords who owned various premises that Merivale group lease. The business uses Xero to handle all of its accounting. They also use a variety of apps in their app stack that integrate with Xero. These apps include: Billing Supplier management Customer relationship management Payroll Employee scheduling Inventory Point of sale Payments Management reporting and analysis. The business has spent extra during COVID19 on additional cleaning and sanitising stations. The health departments in each state and territory do not report any breaches of state COVID19 rules in relation to social distancing, health or food safety. This has been especially challenging because famous spots like The Ivy are renown for large parties frequented by social climbers, Instagram influencers and old-money rich kids alike. The marketing department focused on attracting extremely wealthy customers who could pay a significant premium for a dining and/or entertainment experience. These customers were geographically focused within 15km of a Merivale location to ensure that foods remained at a high quality during transit. They also developed luxury online offerings such as $300 cooking classes for kids cupcakes and $800 seafood cooking lessons. These online classes included all ingredients, even necessary speciality cookware. All contained within luxury packaging and hand delivered by Merivale staff. Another online sales opportunity was one-on-one mentoring sessions via Zoom with CEO Justin Hemmes. The board of directors is led by the Merivale Group founders as co-chairs. The other directors include private investors and high profile business people. These directors include Brian Hartzer, Ken Barton and JeanSebastien Jacques.

The Audit Manager, Camille, has asked you to prepare a preliminary list of significant risks for the audit engagement of Merivale and assess Inherent Risk. Your inherent risk assessment should be high, medium or low. (1 mark) Identify and explain 3 significant risks for Merivale (including the affected account(s) and assertion(s)).