DLP & Associates, a firm of Chartered Accountants, are in midst of conducting audit of Twist and Spin Limited. The company is in business since…

DLP & Associates, a firm of Chartered Accountants, are in midst of conducting audit of Twist and Spin Limited. The company is in business since last 15 years and have appointed DPL & Associates as their auditor for the first time for a term of 5 years beginning from financial year 2023-24. While identifying and assessing the risk of material misstatement at assertion level, the engagement team had assessed risk of material misstatement for revenues and trade receivables to be high. The team is considering to send negative confirmation requests as sole substantive procedure to some business entities representing trade receivables appearing in the financial statements of the company. The company had made sales to these business entities in January, 2024. Such business entities are few and have quite large balances as on 31 st March, 2024. However, team members are not on the same page regarding sending negative confirmation requests. Besides considering sending of confirmation requests, engagement team has planned certain audit procedures pertaining to trade receivables. These procedures include: Verification of invoices issued during last 7 days of financial year 2023-24 to verify that goods have been despatched by the company.Selection of a few invoices from ageing report of the month March 2024 for verification of correctness of the billed amounts, to correct customers and on correct dates.Preparation of schedule of movement of bad debts.Review of the process of providing discounts to ensure that it is in accordance with company policy. Another junior team member, S, observed that “Share Options Outstanding Account" reflected in the financial statements of the company. He started searching classification requirements of Schedule III of Companies Act, 2013 in this regard. The engagement team wants to ensure that only the inventories held by company have been recorded in the financial statements and do not include any inventories belonging to third parties. They are keen to verify completeness assertion for inventories. The team has planned following audit procedures in this respect: Comparison of inventory turnover ratio of current period with previous years;Vertical analysis of current period with previous years;Comparison of budgetary expectations vis-à-vis actuals;Performing purchase and sales cut-off tests During the course of audit, R, a team member concluded that company has followed a particular accounting policy for revenue recognition during year 2023-24 which is in accordance with Accounting Standards and applicable financial reporting framework, but it was not consistently applied in preceding period having an impact upon opening balances of trade receivables of current year 2023-24. R is confused regarding the possible implications on auditor's report on this issue. Based upon above, answer the following questions: -