3 You are the manager responsible for the audit of Albreda Co, a limited liability company, and its subsidiaries. The group mainly operates a chain of national restaurants and provides vending and other catering services to corporate clients. All restaurants offer ‘eat-in’, ‘take-away’ and ‘home delivery’ services. The draft consolidated financial statements for the year ended 30 September 2005 show revenue of $42·2 million (2004 – $41·8 million), profit before taxation of $1·8 million (2004 – $2·2 million) and total assets of $30·7 million (2004 – $23·4 million). The following issues arising during the final audit have been noted on a schedule of points for your attention: (a) In September 2005 the management board announced plans to cease offering ‘home delivery’ services from the end of the month. These sales amounted to $0·6 million for the year to 30 September 2005 (2004 – $0·8 million). A provision of $0·2 million has been made as at 30 September 2005 for the compensation of redundant employees (mainly drivers). Delivery vehicles have been classified as non-current assets held for sale as at 30 September 2005 and measured at fair value less costs to sell, $0·8 million (carrying amount, $0·5 million). (8 marks) Required: For each of the above issues: (i) comment on the matters that you should consider and (ii) state the audit evidence that you should expect to find, in undertaking your review of the audit working papers and financial statements of Albreda Co for the year ended 30 September 2005. NOTE: The mark allocation is shown against each of the three issues.