You are an Audit Manager in Aboto & Associates, responsible for the audit of the Obina Group (the Group). You are reviewing the audit working papers for the consolidated financial statements relating to the year ended 31 March 2021. The Group specializes in the wholesale supply of steel plate and sheet metals. The draft consolidated financial statements recognize revenue of GH¢7,670 million (2020 – GH¢7,235 million), profit before taxation of GH¢55 million (2020 – GH¢80 million) and total assets of GH¢1,560 million (2020 – GH¢1,275 million). Aboto & Associates audits all of the individual company financial statements as well as the Group consolidated financial statements. The Audit Senior has brought the following matters, regarding a number of the Group’s companies, to your attention:

1. Fuga Plc
   The Group purchased 40% of the share capital and voting rights in Fuga Plc on 1 May 2020. Fuga Plc is listed on the Ghana Alternative Market. The Group has also acquired options to purchase the remaining 60% of the issued shares at a 10% discount on the market value of the shares at the time of exercise. The options are exercisable in 18 months from 1 May 2021. Fuga Plc’s draft financial statements for the year ended 31 March 2021 reveals revenue of GH¢90 million and a loss before tax of GH¢12 million. The Group’s Finance Director has recognized Fuga Plc as an associate in this year’s group accounts and has included a loss before tax of GH¢4.4 million in the consolidated statement of profit or loss.
   (7 marks)
2. Bavi Plc
   Bavi Plc is a foreign subsidiary whose functional and presentational currency is the same as Obina Plc and the remainder of the Group. The subsidiary specializes in the production of stainless steel and holds a significant portfolio of forward commodity options to hedge against fluctuations in raw material prices. The local jurisdiction does not mandate the use of IFRS and the Audit Senior has noted that Bavi Plc follows local GAAP, whereby derivatives are disclosed in the notes to the financial statements but are not recognized as assets or liabilities in the statement of financial position. The disclosure notes include details of the maturity and exercise terms of the options and a directors’ valuation stating that they have a total fair value of GH¢6.1 million as at 31 March 2021. The disclosure notes state that all of the derivative contracts were entered into in the last three months of the reporting period and that they required no initial net investment.                                         (6 marks)
3. Kontomo Plc
   Kontomo Plc is a long-standing subsidiary in which the Group parent has a direct holding of 80% of the equity and voting rights. Audit work on revenue and receivables at Kontomo Plc has revealed sales of aluminum to its parent company in March 2021 amounting to GH¢77 million which have been recorded in the subsidiary’s financial statements. However, the audit procedures have identified that the receipt of aluminum was not recorded by the parent company until 2 April 2021. The group has made no adjustment for this transaction in the draft consolidated financial statements. Kontomo Plc makes a 10% profit margin on the sale of aluminum.                                                            (7 marks)

Required:
Comment on the matters to be considered and the audit evidence you should expect to find during your review of the Group audit working papers in respect of each of the issues raised above.