a) Analytical Procedures: Analytical procedures involve the evaluation of financial information by studying plausible relationships among both financial and non-financial data. They include the comparison of actual results to expected outcomes, using trends, ratios, and statistical analysis to identify significant variances or unusual items that require further investigation.
(2 marks)

b)
i) Analytical procedures to confirm revenue and profit:

1. Compare Sales Trends: Review monthly or quarterly sales figures for the current year compared to the prior year to identify any significant fluctuations or trends.
2. Gross Profit Margin Analysis: Calculate and compare the gross profit margin across different stores and over time to ensure consistency and accuracy in revenue recognition.
3. Revenue per Store: Perform an analysis of revenue per store and compare it to budgeted figures or industry benchmarks to confirm the overall reasonableness of revenue and profit.
   (3 marks)

ii) Substantive procedures for assertions:

• Valuation of Inventory:
  1. Inspect Purchase Invoices: Verify the cost of a sample of inventory items by tracing them to supplier invoices.
  2. Net Realizable Value Test: Compare selling prices of inventory items to their costs to ensure that inventory is not overvalued and can be sold for more than its cost.
  3. Physical Count Observation: Observe the year-end inventory count to confirm that quantities on hand are correctly valued and not impaired.
     (3 marks)
• Completeness of Payables:
  1. Supplier Statement Reconciliation: Reconcile statements from key suppliers with the company’s records to ensure all liabilities are recorded.
  2. Subsequent Payment Review: Examine payments made after the year-end to confirm whether they relate to liabilities existing at the year-end.
  3. Cut-Off Testing: Verify that goods received before year-end but invoiced afterward are included in the correct period as payables.
     (3 marks)

c) Substantive procedures to confirm PW’s bank loan:

1. Inspect Loan Agreement: Review the loan agreement to confirm the loan terms, repayment schedule, and interest rate.
2. Bank Confirmation: Obtain direct confirmation from the bank to verify the outstanding balance, interest accrued, and any associated loan covenants.
3. Recalculate Interest Expense: Recalculate the interest expense for the year and verify that it has been correctly recorded in the financial statements.
4. Classify Loan Appropriately: Ensure that the loan is correctly classified between current and non-current liabilities based on the repayment schedule.
   (4 marks)