Reference no: EM132687237

Problem 1: Evaluate each of the following independent situations and the determine the type of audit opinion which should be given. Justify your concern.

a) A flood destroyed the client's offices and all the accounting records just before the end of the financial year. The client does not have copy of the records.

b)An entity is facing significant litigation as a result of dumpling oil in the ocean. This is adequately disclosed in the notes to the financial statement.

c)The client has provided a provision for inventory obsolescence of $250 000. Based on your audit assessment, you have determined that the provision should be $300 000. Materiality for the clients has been set at $80 000, and you are satisfied in all other material respects.

d) The client refuses to include all liabilities in the balance sheet, and the auditor believes that the effect of this action is pervasive on the financial statements.

e) You are currently performing the audit of XYZ Limited. Your audit firm has been in dispute with management over the carrying value of brand names. Due to the materiality of the amounts involved, you decided to engage an expert to perform an independent valuation. The result from the expert was close to your original estimate and still materially different from that of management. The directors refuse to amend the financial statements.