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You are the audit senior on the audit of Fashion Easters (Proprietary) Limited (Fashion) for the year ended 30 June 2020. The following information about

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You are the audit senior on the audit of Fashion Easters (Proprietary) Limited ("Fashion") for the year ended 30 June 2020. The following information about the company is available to you: Fashion is listed on the JSE. Fashion is a wholesaler of clothing and sells a wide range of clothing items. The company purchases its clothing from local and foreign suppliers and operates its business from several branches across South Atrica. During the financial year, the company experienced a decrease in profits due to lockdown regulations, leading to customers purchasing from online stores. Online shopping has become very popular over the past few years as this is convenient for customers. Due to this profit decrease, management informally instructed the credit controller to relax the internal controls regarding credit terms and policies to boost sales figures for the financial year under audit. The decrease in profits is of great concern to the Chief Financial Officer (CFO) as it will result in a reduction of management's performance bonuses. While interviewing the CFO regarding the calculation of management's performance bonuses, the CFO was very evasive in answering certain questions. In March 2020, Fashion was notified that it is being sued for customers having skin reactions from wearing certain clothing items. Fashion's Chief Executive Officer (CEO) has apologised to the public but still fears that the litigation may hugely impact Fashion's future business relations. Inventories are measured at the lower of cost or net realisable value, and the cost price is determined using the first-in-first-out (FIFO) cost formula. The measuring of the inventory balance has not always proved to be reliable, mainly due to the limitations of the accounting system. Due to the unreliable measurement of the inventory balance, Fashion decided to change its accounting system during the financial year from a partially automated system to a fully automated system that is also compatible with your audit firm's software. Required: For 3.1 and 3.2, present your answers as follow: 3.1) Identify the risk indicators at the financial statement level. (8 marks) 3.2) For each risk identified in 3.1, describe the significant risks at the financial statement level present in the financial statements of Fashion

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