You are the manager responsible for the audit of Setter Stores Co, a company which operates supermarkets across the country. The final audit for the year ended 31 January 2013 is nearing completion and you are reviewing the audit working papers. The draft financial statements recognise total assets of $300 million, revenue of $620 million and profit before tax of $47·5 million.
Three issues from the audit working papers are summarised below:

(b) Sale and leaseback arrangement
A sale and leaseback arrangement involving a large property complex was entered into on 31 January 2013.

The property complex is a large warehousing facility, which was sold for $37 million, its fair value at the date of the disposal. The facility had a carrying value at that date of $27 million.

The only accounting entry recognised in respect of the proceeds raised was to record the cash received and recognise a non-current liability classified as ‘Obligations under finance lease’.

The lease term is for 20 years, the same as the remaining useful life of the property complex, and Setter Stores Co retains the risks and rewards associated with the asset. (7 marks)

Required:
Comment on the matters to be considered, and explain the audit evidence you should expect to find during your file review in respect of each of the issues described above.