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CoffeeKing Ltd is an international distributor of coffee machines. The company specialises in selling automated and manual coffee machines to department stores and specialist coffee shops in Australia and Singapore.

During the 2021 financial year, CoffeeKing expanded its product range to include coffee making accessories and coffee beans. The company also set up an online shop, so customers can purchase products via its website. Customers who purchase goods online only become debtors when the goods they ordered are actually received by them.

In the past six months, CoffeeKing has diversified its business into China and Japan. Two founding board members resigned in September 2020 and have since been replaced with two new board members who have solid knowledge of the Asian markets. This has proven invaluable in the development of CoffeeKings business plan. The business plan includes expansion into Malaysia and Indonesia; however, these economies are currently unstable due to COVID-19. There has been a significant decline in local Australian sales in the second half of the financial year, while the company has been focused on the expansion into the Asian markets.

As the business is expanding rapidly, there has been a significant upgrade to the IT systems, with the accounting system tailored to ensure that month-end reporting, which includes the consolidation of entities with foreign currencies, is completed efficiently. Managements annual bonus is dependent on a KPI that requires a high liquidity position on the balance sheet at year end.

As an auditor for Wadeson Chartered Accountants (WCA), you have been assigned to the audit team for CoffeeKing, for the financial year ending 30 June 2021.

During the audit planning stage, the financial controller has given you the trial balance extract below for CoffeeKing for 30 June 2021.

CoffeeKing extract from trial balance as at 30 June 2021:
Account 065 Debtors	$335,876
Account 078 Trade creditors	$868,034
Account 080 Secured loan (non-current)	$720,576
Account 098 Revenue	$9,343,687

Required:

1. 1. Identify conditions or events that may indicate risks of material misstatement for CoffeeKing.
2. 2. Based on the overall background information, identify three (3) account balances at risk of material misstatement.
3. 3. For each account balance identified in (b) above, identify the key assertion at risk of material misstatement.
4. 4. Justify your answers to (c) above
   5. For each key account balance at risk identified in (b) above describe an extended substantive test of detail that is responsive to the key assertion at risk of material misstatement.

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