You are the auditor of Pegasus Limited (Pegasus), a resources mining company. Pegasus owns and maintains a large fleet of trucks to transport mineral ore across Western Australia. During trialling of self-driving trucks that were introduced to the companys fleet during the year, a significant design flaw was discovered causing the trucks to lose control spontaneously. During the year, a significant amount of research and development has been capitalised in relation to the self-driving trucks and Pegasus has commenced legal action against an engineering consultancy firm that was engaged to provide expertise in the design of the trucks. Which of the following accounts and assertions is MOST likely to represent a risk in the audit of Pegasus?

Question 8Select one:

a.

Inventory: Accuracy, Valuation and Allocation.

b.

Property, Plant and Equipment: Accuracy, Valuation and Allocation.

c.

Legal Expenses: Occurrence.

d.

Property, Plant and Equipment: Existence.