CA Trustworthy has accepted audit of financial statements of a company viz. Precision Industries Private Limited for year 2024-25. The company's…

CA Trustworthy has accepted audit of financial statements of a company viz. Precision Industries Private Limited for year 2024-25. The company's annual turnover for year 2024-25 is approximately 250 crores. As he is conducting the audit of the company for the first time, he started gaining knowledge of the business and its internal controls to identify and assess the risk of material misstatement. In this regard, he has made inquiries from certain personnel including company's in house legal counsel and various departmental heads as such inquiries can divulge information that is likely to identify and assess risks of material misstatement due to fraud or error. The company is also having internal audit department headed by Mr. A. Precisely, he has inquired from following persons to identify and assess risks of material misstatement due to fraud or error.: (i) Mr. A, Head of Internal Audit Department. (ii) Mr. John, in-house legal counsel. (iii) Mr. I, IT Systems Head. Later, while conducting audit, he observed application of few controls in IT systems. He also made extensive inquiries from middle level IT personnel about application of various controls. Based on information received from inquiry of Mr. John, risk of material misstatement in litigation or claims involving the company was assessed by him. It was also decided later to issue letter of inquiry to Mr. F who is external legal counsel of company. He has also gone through internal audit reports submitted to the management and decided to use internal auditor to provide direct assistance to perform following procedures labelled as P, Q, R and S. (P) To vouch few expenses bills. (Q) To trace transactions through information system. (R) To verify accuracy of ageing of trade receivables. (S) To evaluate appropriateness of management's use of going concern assumption. During the course of audit, he has verified samples of sales invoices with entries recorded in books of accounts and sent external confirmation requests to selected trade receivables. There were 100 trade receivables outstanding as at 31st March, 2025 and it was decided to send external confirmation requests to 20 trade receivables. He had chosen one trade receivable balance randomly and thereafter every 5th balance was chosen. The responses to external confirmation requests were duly received. Based on the above facts, answer the following: