(b) You are the audit manager of Petrie Co, a private company, that retails kitchen utensils. The draft financial statements for the year ended 31 March 2007 show revenue $42·2 million (2006 – $41·8 million), profit before taxation of $1·8 million (2006 – $2·2 million) and total assets of $30·7 million (2006 – $23·4 million). You are currently reviewing two matters that have been left for your attention on Petrie’s audit working paper file for the year ended 31 March 2007: (i) Petrie’s management board decided to revalue properties for the year ended 31 March 2007 that had previously all been measured at depreciated cost. At the balance sheet date three properties had been revalued by a total of $1·7 million. Another nine properties have since been revalued by $5·4 million. The remaining three properties are expected to be revalued later in 2007. (5 marks) Required: Identify and comment on the implications of these two matters for your auditor’s report on the financial statements of Petrie Co for the year ended 31 March 2007. NOTE: The mark allocation is shown against each of the matters above.