You are currently planning the 30 June 2021 audit of KKK Ltd (KKK), an Australian listed company that produces and exports woodchip to Japan.

You obtained the following overview of this year's operations:

• On current usage figures, it is expected that the existing plant and equipment will last until December 2021. Sufficient spare parts are on hand to carry out routine maintenance work only. However, should replacements be required, it would take at least more than six months to have a replacement made and shipped to Australia. It is unlikely that the company could survive a six months' interruption to normal operations.

• Timber is purchased in 50 hectare lots from plantations and state forests. In the past, 70 per cent of timber was sourced from plantations; however, this has fallen to 50 per cent in the current year. The corresponding increase in timber sourced from state forests has angered environmental groups. Several shipments of woodchip have been delayed, upsetting the Japanese customers who are threatening to deduct 15 per cent from amounts owing as compensation for lost production time.

• Last month, a number of protestors suffered injuries during a demonstration against wood-chipping. Protestors are now suing KKK for damages. KKK is fighting the case and appears to have a reasonable chance of winning. However, the adverse publicity being generated is making the state government nervous about selling KKK any more of its timber resources.

• One of KKK's customers, SD Ltd (SD), is claiming that the latest delivery of woodchip received was contaminated with a microbe which has made it useless for heavy-duty items such as desks and bookcases. SD is refusing to pay its account, which is already four months overdue.

• In January, KKK upgraded its trade payables system to automatically update the general ledger when trade payables entries are made. Some problems have been experienced with the new accounts payable ledger, which is split into $US and $AUD amounts. In some cases, $US amounts have been recorded as $AUD, resulting in inaccurate creditor balances. Month-end rollovers have also proved problematic, with creditor balances being incorrectly re-set to zero at the first of every month.

• During the period, the Australian dollar has risen against the yen. A recent downturn in the Japanese economy is affecting forward orders, which have fallen by 15 per cent.

• Estimated turnover for the year is $20m, down from $23m in 2020. KKK expects to make a small loss for the year ended 30 June 2021. This will be the third year the company has failed to make a profit.

Required:

From the above information provided in relation to KKK:

1. Identify FOURkey accounts that are at high risk of misstatement.

2. For each account identified in (1) above:

(a) Provide a brief explanation as to why the account is at risk:

(b)List the key assertion where audit efforts should be concentrated; and

3. List FOUR going concern issues for KKK in the next 12 months.