Reference no: EM13557316

Consider the following independent situations. Discuss the audit opinion you consider most appropriate for each of these situations.
(a) During the course of your audit of Alex Ltd., you noted that the company has made an allowance of $250,000 for irrecoverable receivables. Based on the audit evidence you have obtained, you are of the opinion that a provision of $450,000 should be made instead. However, the Alex' s management refuses to adjust for the same. The amount of under-provision is considered material.
(b) Total cash balance at the year-end date was $740,000, kept in several bank accounts of Bob Ltd. Some of these bank accounts are in a foreign country. You have been unable to obtain bank confirmations or any other third party confirmations with respect to these foreign bank accounts. In fact, the company has been unable to provide you with any bank statements or other supporting documentation in relation to these bank accounts. The cash balance is about 30% of total current assets.
(c) Due to an argument with the previous auditor, ABC Fashions Ltd. has employed you as auditor after the company's financial year end. Therefore, you have not carried out the stock take. The accounting records and other evidence were not reliable enough to enable the auditors to obtain satisfactory evidence regarding the company's stock balance.