Arya Ltd. is a company engaged in the manufacture of stainless-steel household items such as hot pots, pressure cookers, bottles, and cutlery sets.…

Arya Ltd. is a company engaged in the manufacture of stainless-steel household items such as hot pots, pressure cookers, bottles, and cutlery sets. The company is having its corporate office in Delhi and manufacturing plant in Ajmer, Rajasthan. To meet growing demand, Arya Ltd. planned to expand its manufacturing by setting up two new plants in Raipur district and also raised 5 crore by issuing Equity Shares of face value 10at a premium of 5. The company had Reserves and Surplus of 2 crore, which includes securities premium and general reserve. S.K. & Associates, statutory auditors since FY 2022–23, planned the audit and assigned roles accordingly: Riya, an articled assistant, was asked to perform analytical procedures on raw material inventory for obtaining evidence with respect to the overall reasonableness of purchase quantity and price of inventory. However, she collected the reports from the management for. raw materials as a percentage of total stock and compared the same with the data of the previous year. She also discussed the reasons for the variations with the management.Shobhit, a paid CA, was assigned the physical verification of inventory. CA Shobhit was present at the physical inventory count but did not record dates or test counts, although he took some photos were taken.Audit documentation gaps were also observed regarding basis of materiality, and related party transactions which were discovered during the audit but not adequately documented. Based on the above facts, answer the following: