You are an audit senior in CBD & Co. At the request of an audit partner, you are preparing the audit programme for the income and receivables systems of PTU Limited. Information on receivables The chief accountant has informed you that receivables days have increased from 45 to 60 days over the last year. The aged receivables report produced by the system is shown below: Number of receivables Range of debt Total debt $ Current $ 1 to 2 months old $ More than 2 months old $ 15 Less than $0 (87,253) (87,253) 197 $0 to $20,000 2,167,762 548,894 643,523 975,345 153 $20,001 to 50,000 5,508,077 2,044,253 2,735,073 728,751 23 $50,001 or more 1,495,498 750,235 672,750 72,513 388 9,084,084 3,256,129 4,051,346 1,776,609 In view of the deteriorating receivables situation, a direct confirmation of receivables will be performed this year. Required: Discuss which particular categories of receivables might be chosen for the sample. (10 marks) (b) You are the audit manager who is responsible for the audit of Sparkle Company, it is a listed company selling fashionable jewellery and is a major player in the market. The jewellery industry has been adversely affected by the pandemic situation when incoming tourists have almost stopped. The revenue in current year dropped by 30% and resulted in a net loss for the year of $16 million. The board of directors announced no dividend will be distributed this year. Due to its aggressive expansion plan in the past few years, the company has incurred significant bank loans, resulting in a net current liability of $6 million in current year. The management decided to shut down eight out of twelve jewellery stores in Hong Kong in order to reduce the operating expenses. Required: (a) Explain the going concern assumption and describe your responsibility towards it. (4 marks) (b) Identify three indicators suggesting that Sparkle Company may have going concern problem. (6 marks)