You are an audit senior of Omar and Ropar, CPA's and you are planning the first-time audit of Clementine Ltd. for the year ended December 31, 2020. The company makes and sells organic fruit drinks. The audit manager attended a planning meeting with the CFO and has provided you with the following notes of the meeting and financial statement extracts: Planning meeting notes: During the year, Clementine Ltd. spent $500,000, which is included within intangible assets on the balance sheet, on the development of new product lines, some of which are in the early stages of their development cycle. Additionally, the company is looking to expand production of some of its beverage products and so during the year it purchased and installed new equipment. All costs, incurred in the purchase and installation of that asset, have been included within property, plant and equipment. These capitalised costs include the purchase price of $1,000,000, installation costs of $100,000 and a five-year servicing and maintenance plan costing $140,000. To finance the development projects and the new equipment, the company borrowed $2,000,000 from the bank at a 3.5% interest rate. The loan is to be paid back over a five-year term. As part of the loan agreement, Clementine is required to have audited financial statements. Clementine has indicated that developing new products and expanding production is important as the company intends to take the company public in the next 12 months The company started new initiatives during the year to boost revenue. It offered extended credit terms of 90. davs to its largest customers.on the condition that their sales order.cuantities were increasedule The company started new initiatives during the year to boost revenue. It offered extended credit terms of 90 days to its largest customers on the condition that their sales order quantities were increased. In addition, Clementine Ltd. made an announcement in October of price matching - and so it promised to match the prices of any competitor for similar products purchased. Customers who prove that they could purchase the products cheaper elsewhere are asked to claim the difference from Clementine Ltd., within one month of the date of purchase of goods, via its website. The company intends to include a refund liability of $250,000, which is based on the monthly level of claims to date, in the draft financial statements The CFO informed the audit manager that a problem arose in June 2020 in relation to the one of their soil products falsely sold as organic in error. Some of the soil had already been sold before the issue was identified. Sales of this soil was halted and the product was recalled. Management is investigating whether the recalled soil will be in a condition to be re-sold. Financial statement extracts for year ending December 31 are provided. The CFO also provides the auditor with an oral representation confirming that accounts receivable, included in the Total Asset balance, exist. Current Year ($) 9,850,000 Prior Year (5) 6,990,000 Revenue Current Year ($) Prior Year ($) Revenue 9,850,000 6,990,000 Gross Profit 1,190,000 2,410,000 4,950,500 Total Assets 4,260,000 190,000 410,000 500,000 Net Income (loss) before tax Gain on Sale of Disposal (included in NIBT) Days in Receivable 85 days 33 days Required Part A Identify seven factors that impact the risk of material misstatement. Explain how each factor impacts the risk assessment (14 marks) Part A Identify seven factors that impact the risk of material misstatement. Explain how each factor impacts the risk assessment. (14 marks) Part B Calculate and conclude on planning and performance materiality for the current year. Use three possible bases and use the benchmarks at the high end of the range. (7 Marks) Part Describe the relevance and reliability of the oral representation from the CFO regarding the fact that accounts receivable exist. (4 Marks)