It is $|$ July $20$X$1.$ Hyacinth Co develops and manufactures computer components and its year end was $30$ April $20$X$1.$ The company has a large factory, and two warchouses, one of which is off$-$site. You are an audit supervisor of Tulip & Co and the final audit is due to commence shortly. Draft financial statements show total assets of $$23\mathrm{.}2$m and profit, before tax of $$6\mathrm{.}4$m$.$ The following three matters have been brought to your attention.

Inventory valuation

Your firm attended the year$-$end inventory count for Hyacinth Co and confirmed that the controls and processes for recording work in progress $($WIP$)$ and finished goods were acceptable. WIP and finished goods are both material to the financial statements and the andit team was able to confirm both the quantity and stage of completion of

WIP

Before goods are dispatched, they are inspected by the company's quality control department. Just prior to the inventory count, it was noted that a batch of product line "Crocus', which had been produced to meet a customer's specific technical requirements, did not meet that customer's quality and technical standards. This inventory had a production cost of $$450\mathrm{.}000.$ Upon discussions with the production supervisor, the finance director believes that the inventory can still be sold to alternative customers at a discounted price of $$90,000.$

Research and development

Hyacinth Co includes expenditure incurred in developing new products within intangible assets once the recognition criteria under IAS $38$ Intangible Assets have been met. Intangible assets are amortised on a straight$-$line basis over four years once production commences. The amortisation policy is based on past experience of the likely useful lives of the products. The opening balance of intangible assets is $$1\mathrm{.}9$m$.$ In the current year, Hyacinth Co spent $$0\mathrm{.}8$m developing three new products which are all at different stages of development.

Sales tax liability

Hyacinth Co is required by the relevant tax authority in the country in which it operates to charge sales tax at $15\%$ on all products which it sells. This sales tax is payable to the tas authority. When purchasing raw materials and incurring expenses in the manufacturing process, the company pays $15\%$ sales tax on any items purchased and this can be reclaimed from the tax authority.

The company is required to report the taxes charged and incurred by completing a tax return on a quarterly basis, and the net amount owing to the tax authority must be remitted within four weeks of the quarter end. The draft financial statements contain $$1.$ Im liability for sales tax for the quarter ended $30$ April $20$X$5.$

Required:

$($a$)$ Describe procedures the auditor should perforin to obtain sufficient and appropriate I audit evidence in relation to the VALUATION of Hyacinth Co's inventory. $(8$ marks$)$

$($b$)$ Describe procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to Hyacinth Co's rescarch and development expenditure. $(6$ marks$)$

$($c$)$ Describe procedures the auditor should perform to obtain sufficient and appropriate to Thacinth Co's year$-$end sales tax liability. $(6$ marks$)$