CA J is nearing completion of audit of Cheap Cost Private Limited, a manufacturing company for the year 2023-24. The draft financial statements of…

CA J is nearing completion of audit of Cheap Cost Private Limited, a manufacturing company for the year 2023-24. The draft financial statements of the company show a profit before tax of 5 crores. Materiality for financial statements as a whole has been determined @ 5% of Profit before Tax. At the end of June 2024, he is considering following issues flagged during the course of audit which remain uncorrected: A fire took place in one of the premises of the company on 1 st May, 2024 resulting in damages to all the inventories lying there amounting to 1 crores. The inventories of affected premises are insured with Quick Bima Limited for 50 lakhs and company has also lodged a claim with it which is still to be settled.The company has debited 10 lakhs under “Machinery Account” whereas expenditure relates to normal wear and tear of high-speed automated machinery. The amount has been wrongly capitalised under “Machinery account". (Ignore depreciation effect)The company has not properly accounted for necessary elements of cost in arriving at work in progress. Further, estimates regarding various stages of production have not been made properly. All such factors have resulted in overstatement of work in progress inventories by 20 lakhs. No other issues except as stated above merit attention. Besides, written representation letter has also been obtained on matters concerning management's responsibilities regarding fulfilment of responsibilities for preparation of financial statements and providing access to all information to CA J. However, written representation provided to CA J begins in the below stated manner: “This representation letter is provided in connection with your audit of the financial statements of Cheap Cost Private Limited for the year ended March 31, 2024, for the purpose of expressing an opinion as to whether the financial statements give a true and fair view in accordance with the applicable accounting standards in India. We confirm that (to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves) ....................” Based upon above, answer the following questions: -