(a) Property, plant and equipment
Property, plant and equipment is material at 87% of net assets. Substantial amounts of property, plant and equipment would be expected in a manufacturing company.
However, property, plant and equipment has increased by 2% this year yet depreciation/loss on sale has increased by 72%.
Although this is usually a low risk area (except for the judgement needed to assess useful lives) the balance here may be overstated. Additions and disposals during the year need further investigation to ensure that they have been properly accounted for.

Trade receivables
Trade receivables have increased by 67% although revenue has increased by only 6%. This may indicate a recoverability problem – which is backed up by the increase in the collection period from 19 days to 30 days.
Although judgement is needed to decide on the extent of allowances for receivables, it would seem that credit control is slipping and that allowances may need to be increased.
More extensive testing than last year may be needed on the recoverability of debts and on the accuracy of cut-off.

Inventory
Inventory has increased overall by 16% due to increases in raw materials and finished goods of 38% and 16% respectively. This is in spite of a 22% reduction in work-in-progress. Inventory turnover has fallen from 9.9 times to 8.6 times. All of these facts may indicate that inventories are building up with insufficient orders being available, or could indicate the existence of obsolete/slow-moving inventories.
Also, there has been no real increase in cost of sales, despite the 6% increase in revenue. This might indicate an error in cut-off or an overvaluation of closing inventory.
Inventory is typically a high risk area, particularly in a manufacturing entity with its three stages of inventory. Valuation will need to take into account the stage of completion and net realisable values.

(b) Property, plant and equipment
An explanation for the increases in net book value and depreciation/loss on disposals.
Confirmation of the accounting policy for depreciation to ensure it is consistent with the previous year.
The company’s policy for reviewing useful lives to ensure they are reasonable (especially where assets have been sold at a loss).
A detailed analysis of movements on property, plant and equipment during the year, including details of additions and disposals and depreciation charges.
Whether any assets are recorded at a valuation as opposed to cost.
The split of the expense between depreciation and loss on sales.
Any own work capitalised.

Trade receivables
An explanation for the increase in the trade receivables collection period.
Details of any significant new customers during the year and information on their credit ratings.
An analysis of bad debts written off and the allowance for receivables.
An aged receivables analysis.
Details of post year end cash receipts.

Inventory
Explanations for the movements in raw materials, work in progress and finished goods and for the overall increase in inventory.
Details of any adjustment required to physical inventory records as a result of the year end count.
Details of post year-end sales and next year’s order book.
An analysis of the allowance for obsolete inventory.
Details of the increase in revenue and whether it has come from a different sales mix, price increases or volume increases.
Confirmation that inventory has been valued at the lower of cost and net realisable value.