Question is below:

PART 2: CUT-OFF TEST (10 MARKS) (Suggested Time: 18 Minutes) The auditor is reviewing the sales cut-off for the Restaurant of CARE Fiji as at 31" December 2017. The auditor noted the following transactions. Date of Transaction Month Recorded Sales (S) Cost (S) 28 December 2017 December, 2017 146,000 120,000 29 December 2017 December, 2017 95.000 30.000 30 December 2017 January, 2018 77,000 81,000 2" January 2018 December, 2017 208,000 220,000 4" January 2018 January, 2018 120,000 65,000 Required: 1. Calculate the sales adjustment required for the period ending 31" December 2017? (5 marks) 2. If the CFO records the transactions as stated above, what will be the effect on income for the period ending 31" December 20177 Explain. (5 marks)QUESTION 2 - FRAUD RISK (10 MARKS) (Suggested Time: 18 Minutes) Cleanway Limited is a public company that competes in a highly competitive market for manufactured household products. The Company is dominated by Rob Bigbucks, the chairman and chief executive officer, who has guided the Company since it was a private company and has extensive influence on all aspects of company operations. Rob Bigbucks is known to have a short temper and in the past has threatened individuals in the accounting department with no pay rise if they failed to help him achieve company goals. Furthermore, the company has extended its influence over customers and has dictated terms of sale to ensure that customers are able to obtain desired quantities of their most popular products. Bonuses based on sales are a significant component of the compensation package for individual product sales managers. Sales managers who do not meet sales targets three quarters in a row are often replaced. The Company has performed well until a recent recession, but now the Company is having difficulty moving inventory in most product lines as retailers have difficulty selling in a downturn economy. (Leung et al. 2011, p.353) Required: 1. Identify (at least) four fraud risk factors present in the case above? (4 marks) 2. In the case above, sales is the most significant account that will be misstated. Identify and explain the most significant assertion of sales that will be misstated? (6 marks)