You are a manager in the audit department of Snow & Co, a firm of Chartered Certified Accountants, and you are responsible for the audit of Margot Co. The company has a financial year ending 30 June 20X9, and you are about to start planning the audit.

Margot Co produces fruit-based food products using agricultural produce grown on its farms. Ben Duval, the audit engagement partner, met with the company’s finance director last week to discuss business developments in the year and recent financial performance.

You are provided with the following exhibits:
1. An email you have received from Ben Duval, in respect of the audit of Margot Co.

2. Notes of a meeting which Ben held recently with the finance director of Margot Co.

3. A reference document prepared by Snow & Co containing an overview of the accounting requirements applied in the agriculture sector.

4. Extracts from the latest management accounts of Margot Co and accompanying notes, including the results of preliminary analytical procedures, which have been performed by a member of the audit team.

5. An email which the audit engagement partner received from Len Larch, a production manager working at one of the company’s olive farms.

Required:
Respond to the instructions in the email from the audit engagement partner. (46 marks)

Note: The split of the mark allocation is shown in the partner’s email (Exhibit 1).

Professional marks will be awarded for the presentation and logical flow of the briefing notes and the clarity of the explanations provided. (4 marks)

Exhibit 1 – Email from Ben Duval

Hello
I have provided you with some information in the form of a number of exhibits which you should use to help you with planning the audit of Margot Co for the financial year ending 30 June 20X9.

Using the information provided, I require you to prepare briefing notes for my own use, in which you:

(a) Evaluate the significant risks of material misstatement to be considered in planning the company’s audit. You should not include risks of material misstatement relating to the valuation of the company’s bearer plants or biological assets, which will be evaluated separately. (20 marks)