Question 2 You are an audit team in Figure Innovative and Co and commencing the audit planning for GreatBrush Paints Co (GBP) for the year ended 31 May 2022. GBP is a paint manufacturer and has been trading for over 20 years, it operates from one central site in Selangor, which includes the production facility, warehouse and administration offices. GBP sells all of its paint products to multiple large home improvement stores. HomeGood and Co is their main customer and GBP has a one year contract to be the sole supplier of paint to HomeGood and Co. It secured the contract through significantly reducing prices and offering a four-month credit period, the company's normal credit period is one month. In recent years, GBP has reduced the level of goods directly manufactured and instead started to import paint from South Asia. Approximately 50% is imported and 50% manufactured. Purchase orders for overseas paint are made six months in advance and goods can be in transit for up to two months. GBP inventory reporting is when it receives the goods. GBP has introduced a continuous or perpetual inventory counting system to avoid the disruption of a year end inventory count. The warehouse has been divided into 5 areas and these are each to be counted once over the year. The counting team includes a member of the internal audit department and a warehouse staff member. The following procedures have been adopted: i. The team prints the inventory quantities and descriptions from the system and these records are then compared to the inventory physically present. ii. Any discrepancies in relation to quantities are noted on the inventory sheets, including any items not listed on the sheets but present in the warehouse area. iii. Any damaged or old items are noted and should be removed from the inventory sheets. iv. The sheets are then passed to the finance department for adjustments to be made to the records when the count has finished. v. During the counts, there will continue to be inventory movements with goods arriving and leaving the warehouse. In early June 2022, GBP's finance director (FD) has immediately left the company due to disagrement and dispute arises between top management. The company has temporarily asked the financial controller to take over the role while they recruit a permanent replacement. The old FD has notified GBP that he intends to sue for unfair dismissal. The company is not proposing to make any provision or disclosures for this, as they are confident the claim has no merit. Required: Identify and explain the audit risks discovered at the planning stage of the audit of GreatBrush Paints Co. (25 marks)