Reference no: EM132569571

Question - Consider the following independent and material situations:

(i) An auditor is engaged to audit a client's financial report after the annual physical inventory count. The accounting records are not sufficiently reliable to enable the auditor to become satisfied as to the year-end inventory balances.

(ii) Due to losses and adverse key financial ratios, an auditor has substantial doubt about a client's ability to continue as a going concern for a reasonable period of time. The client has adequately disclosed its financial difficulties in a note to its financial report. The financial report does not include any adjustments that might result from the outcome of this uncertainty.

(iii) A client has a trade receivable who has recently filed for bankruptcy. However, the client does not agree to reduce the recorded value of the receivable to its net realisable value, which is approximately 20 percent of the recorded amount.

(iv) An auditor hires an actuary to assist in checking a client's complex calculations for accrued staff retirement benefits. The accrued staff retirement benefits account for 35% of the client's total liabilities. The actuary's findings are reasonably close to the client's calculations and support the financial report.

Required - For each of the situations (i) to (iv) above:

(a) Indicate the type of audit opinion you would issue.

(b) Give reasons for issuing the particular audit opinion.