CASE STUDY Resilience Auditors Incorporated (Resilience) is a small auditing firm that was established by Teboho Nkuhlu in 2018. Teboho is passionate about auditing and wishes to add value to all his clients by providing an excellent audit and non-audit services. Resilience has two engagement partners, three engagement managers and approximately 10 SAICA audit trainees and is situated in Waterfall, Midrand. Resilience's clients are mainly family-owned restaurants, and they don't have any retail clients or clients listed on the JSE.

Clover Ltd (Clover) is a national bookshop with a complex group structure, including subsidiaries in South Africa, Namibia, Zambia and Swaziland. Clover is listed on the JSE and has a 30 June 2023 year-end. Elizabeth Makgoba is the Chief Executive Officer (CEO) of Clover. Elizabeth believes as the CEO, everyone should "just do as I tell them" and often instructs accounting staff to override controls. She sees the King Code of Corporate Governance and the Companies Act as a waste of valuable resources.

The previous auditors were removed at the AGM due to disagreements with the CEO, and Resilience was appointed. Teboho and Elizabeth have been friends since primary school. Resilience doesn't currently have a footprint across South Africa, or any clients in a similar industry. They have never audited such a complex group structure, including complex consolidations and related party transactions. Teboho is still confident that Resilience will be able to complete the audit, regardless of Elizabeth's conditions. For Resilience to become the auditors of Clover, Elizabeth said that the following conditions have to be met by Resilience, Resilience may not contact the previous auditor; they have to issue a favourable audit opinion at a premium; they have to sign the engagement letter after the audit is completed and complete the audit by mid-July 2023. Elizabeth explained that these conditions are crucial as Clover is applying for a bank loan due to liquidity issues, exchange rate fluctuations and bad debts.

Clover used only to sell books through their bookshops. Still, as Clover's income decreased drastically during the lockdown, they started trading online and delivering books directly to individual customers, increasing sales again. This was a crucial strategic move as management's bonuses are dependent on sales and not the recoverability of bad debts. In addition to increasedsales, Clover decreased their accounting staff to save costs. Most of the current accounting staff have limited IFRS experience, and due to the autocratic management style, Clover has a high staff turnover.

Clover is registered for Value Added Tax (VAT) and their financial statements are compiled in terms of International Financial Reporting Standards (IFRS). Clover doesnt take out forward cover on exchange rate differences for the purchases of inventory.

Based on all the information provided under the heading CASE STUDY, identify and discuss the risks of material misstatement at the overall financial statement level, which the audit team should consider planning the 30 June 2023 year-end audit of Clover Ltd.