Bayview Steel $($Pty$)$ Ltd$,$ a once$-$thriving steel manufacturer based in Durban, has been facing mountingfinancial and operational challenges over the past two years. For over $25$ years, the company hassupplied steel products to South Africas construction and engineering sectors$.$ However, increasingcompetition from cheap imported steel, combined with the volatility of the local economy, has placed thecompany under severe financial strain.The companys most recent financial statements for the year ending $31$ December $2024$ paint aconcerning picture. Bayview Steel $($Pty$)$ Ltd has reported significant operating losses for the secondconsecutive year. Despite previous efforts to stabilize the business, the companys cash flow fromoperations has turned negative, placing additional pressure on its liquidity position. The overdraft facilitywith its primary bank has been fully utilized, and creditors, who had previously granted the companyfavourable payment terms, are now insisting on cash$-$on$-$delivery arrangements.Adding to the financial distress, one of Bayview Steels largest customers, responsible for nearly $35\%$ ofthe companys sales revenue, has recently shifted its business to a competitor. This sudden loss ofrevenue has exacerbated the companys existing difficulties in meeting its financial obligations.Compounding this, local suppliers have become increasingly reluctant to extend further credit, citingconcerns about Bayview Steels ability to meet its liabilities.The operational difficulties are equally pressing. Load shedding has led to erratic production schedules,causing frequent delays in fulfilling customer orders. In addition, a prolonged labour strike earlier in theyear disrupted production for nearly two months, resulting in lost sales and reputational damage.Although the strike has been resolved, morale among employees remains low, and several skilledworkers have resigned to join competitors.Despite these challenges, management has implemented a series of cost$-$cutting measures to alleviatefinancial pressure. The company has significantly reduced operational expenses, including retrenching aportion of its workforce and consolidating production lines to improve efficiency. In an effort to strengthenliquidity, the directors are also in discussions to sell off surplus assets, including machinery that is nolonger essential to core operations.In addition, Bayview Steel $($Pty$)$ Ltd recently secured a financing deal with a private investment firm,providing much$-$needed capital to sustain operations in the short term. However, the financing agreementis contingent on the company meeting strict financial performance covenants, including maintaining aminimum profitability threshold over the next $12$ months. Failure to comply with these covenants couldlead to an early recall of the loan, placing further strain on the companys ability to continue operating.Management remains optimistic about the future. They have developed a detailed cash flow forecast thatprojects a return to profitability within the next year, provided that production stabilizes and new contractswith construction firms are finalized. In particular, discussions with a large property developmentcompany for a multi$-$million$-$rand supply contract are at an advanced stage, and securing this deal couldsignificantly improve Bayview Steels financial position. The directors are confident that these measures,along with the recent financing arrangement, will enable the company to navigate its current difficultiesand restore stability.QUESTION $1(20$ MARKS$)$As the auditor of Bayview Steel $($Pty$)$ Ltd$,$ you are required to:$1\mathrm{.}1$ Identify and discuss any five $(5)$ potential going concern indicators present in the scenario. $(10$ Marks$)1\mathrm{.}2$ Formulate four $(4)$ audit procedures that you would perform to gather sufficient appropriate evidenceregarding the company's ability to continue as a going concern.$(4$ Marks$)1\mathrm{.}3$ Identify and discuss two $(2)$ factors in the scenario that could mitigate the risk of going concern failurefor Bayview Steel $($Pty$)$ Ltd$.(4$ Marks$)1\mathrm{.}4$ Based on the scenario, discuss how the auditor should conclude on the going concern assumptionand the possible reporting implications in the audit report. Assume that a material going concernuncertainty exists but is not adequately disclosed.