(b) Audit risks and responses
– Capitalisation of website costs 2
– Warehouse acquisition 2
– Classification of preference shares 2
– Appropriateness of asset useful lives 2
– Irrecoverable receivable 2
– Sales staff bonus scheme 2
– Product recall 2
– Legal action 2
– Audit timetable, increased detection risk 2
– Accounting for proposed dividend 2
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Max 8 issues, 2 marks each 16
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