Answer Happy

Paul is the partner in charge of the audit for a new client, Umbrella Holdings (UH). The client engaged Paul's audit firm in November 2019, in preparation for the 2020 audit. From 30 January 2020 onwards, UH has consistently paid suppliers late, well in excess of the suppliers' agreed credit terms. This has resulted in some suppliers demanding cash on delivery from UH. Paul is also aware from his review of correspondence between UH and its bank that the company has been experiencing cash flow problems since 2018. Required 1. Identify 4 conditions that would be of concern to Paul (8 marks) 2. Out of the 4 conditions you identified, What is the risk involved in this scenario (2 marks) Place your answer in columns (1) and (2) of the table below (1) (2) Factor Risk