Problem
Ella is getting to know her new client, Bloom Builders, a large custom home design building company. Jack was the audit partner on the job for the last 5 years and Ella is now taking over from Jack. In Ella's preliminary assessment of the Bloom Builders that towards the end of last financial year, Bloom had installed a new inventory software to better manage their inventory due to the increase costs in the building industry. As Bloom was a custom builder they found that using off the rack software did not suit their business model thus they got a company in America to create a custom built inventory software for them to use in the business. This software was not used in the prior year so it did not form part of the audit process.
Task
1. Based on the above, list 2 accounts that will most likely be material in Ella's audit process. Explain why.
2. What audit risks are associated with the new inventory software?