You recently joined Maxwell & Associates as an audit senior. Your firm has been the external auditors of NavigateMe Limited, a New Zealand based Global Positioning System (GPS) manufacturing company for the last four years. The company exports its GPS mostly to car manufacturers in India and Malaysia. You are working on the financial statements of NavigateMe Limited for the year ended 31 March 2020. While reading through the audit planning documentation you discover the following:

The Indian market has grown exponentially over the past four years and has become the company's most significant customer base, representing 75% of NavigateMe Limited's revenue. However, in the past six months, the volume of orders from NavigateMe Limited's Indian customers has fallen by 15%, and two major customers from India have requested extended payment terms.

NavigateMe Limited is under pressure from Chinese manufacturers who have undercut the price of NavigateMe Limited's system, by 25% on average, with a comparable system.

It is mentioned in the prior year's audit documentation that Indian customers usually do not respond to requests to confirm accounts receivable balances at year end.

QUESTION:

(a) Identify two account balances that could be at risk of material misstatement in the statement of financial position.