You are currently employed at ACS Auditors and are the Audit Senior on the audit of Cougar Limited. Cougar Limited's activities are all related to educational games for children ages 3-9. All the games are developed by the entity in-house. The games are advertised online, therefore included in the business activities, are also the operation and maintenance of their website. Cougar Limited has a 31 December financial year-end and you are presently conducting the 2022 audit. The Financial Director of Cougar Limited provided you with an extract of the financial statements and he also expressed his concern about the decline in cash flows. The Financial Manager also mentioned to you that he raised his concern regarding the entity's ability to remain a going concern during a board meeting held on the 23rd of October 2021. The board then decided to take the following actions to ensure the entity remains a going concern: A portion of the debtor's book will be sold to a private Finance House in a debtor's factorisation transaction (75% of the book value of the specific debtors sold). The transaction will secure a cash inflow of R2.9 million by March 2022. Cougar Limited is considering new services, resulting in new revenue streams, which could lead to an increase in entity profits. Sales Cost of sales Gross Profit Net profit/(loss) Non-current Assets Current Assets Inventory Actual figures 2022 R'000 12 560 6 780 5 780 (1 230) 13 500 17 448 4 258 Budgeted figures 2022 R'000 18 912 10 456 8 456 6 123 11 500 16 857 2 980 Actual figures 2021 R'000 23 108 12 258 10 850 3 450 8 000 13 763 2 075 Accounts Current liability Non-current liability Receivables Bank and cash 2.2 13 145 2.3 45 21 520 19 520 11 890 1 987 18 587 17 520 The following additional financial information of Cougar Limited is available: Included in the actual current liabilities figure is a bank balance overdraft of R8 500 000. Increased overdraft facilities had been obtained during the financial year. During the financial year a newspaper article was published indicating a possible copyright infringement claim. According to the newspaper articles and lawyers, a positive outcome of the court case is very important for the survival of the entity. 9 102 2 586 14 456 18 780 Required 2.1 Discuss the appropriateness of the going concern assumption by providing, separately, the aspects that increase the risk of the going concern and the aspects that decrease the risk of the going concern for Cougar Limited's (15 Marks) financial year ended 28 February 2022. Cougar Limited is also struggling to pay its creditors on time and currently has more than half of its creditors outstanding for more than 120 days. This exceeds the agreed-upon terms of 30 days. Based on your discussion in 2.1, discuss the effect of the going concern assumption on the audit report in terms of ISA 570 Paragraph 18a, 18b and 19. (10 Marks) Describe the substantive procedures you would perform regarding the appropriateness of the going concern assumption based on your answers in 2.1 and 2.2. In your answer, include general procedures as well as procedures (15 Marks) in relation to the factorisation of debtor's book HAUD332-1-Jul-Dec2022-FA1-MS-V4-22022022