CA F has been appointed as an auditor of a manufacturing entity. Pursuant to appointment, CA F planned to assess the risk of material misstatement.…

CA F has been appointed as an auditor of a manufacturing entity. Pursuant to appointment, CA F planned to assess the risk of material misstatement. During this process, CA F observed that entity has identified various controls to mitigate the risk. The entity has implemented a control (named TARGET) whose objective is to ensure that production systems are processed to meet financial reporting objectives. On completion of risk assessment procedure, CA F was wandering as to how he can verify the existence of related party relationships and transactions. So, he consulted one of his colleagues, CA Z, who suggested following ways to identify the same: (i) Information supplied by the entity to regulatory authorities. (ii) Entity's income tax returns. (iii) Inventory records maintained by the entity. (iv) Life insurance policies acquired by the entity. On-going through the financial statement provided by the entity, CA F observed that the entity has significantly borrowed the amount during the financial year 2023-24. CA F wanted to ensure that all borrowing on the balance sheet represent valid claims by banks or other third parties. Accordingly, he performed the following procedures: (i) Reviewed subsequent transactions after the end of the reporting period. (ii) Recomputed the interest on borrowing. (iii) Reviewed board minutes for approval of new lending agreements. (iv) Agreed loan balance and loan payables to the loan agreement. CA F decided to perform analytical procedures to obtain audit evidence as to overall reasonableness of purchase quantity and price. For this, CA F scrutinized raw material consumed as per manufacturing account and compared the same with previous years with closing stock. The variations observed were discussed with the management of the entity. Based on the above facts, answer the following Q. Nos. 5 to 8.