Audit differences The following audit differences were noted while performing the audit for the 2022 financial year: a) The company's tax calculation was found to be incorrect because an inadmissible deduction of R280 534 was claimed. The net profit of the company is currently R241 998. b) The inventory in one of the warehouses was not included in the stocktake. The value of this inventory amounted to R336 223. This was not the first year that they experienced issues with the annual stocktake. c) No provision for credit losses was made for the current year. The accounting policy of SendIT Limited is to provide for 6,5% of the outstanding debtors as a provision for credit losses annually. The debtors final figure was R659 678.

REQUIRED:

With reference to the Audit differences, briefly discuss whether the audit differences in your opinion, individually or cumulatively, would have a material effect on the fair presentation of the financial statements. Show your workings clearly. Assume that the final materiality figure is R250 000. (15 marks)