Reference no: EM132731766

Question - Assume that the following separate circumstances could be sufficiently material to require the expression of a qualified opinion:

1. Management wanted to reduce the allowance for doubtful debts by $5 million. The auditor did not agree and felt that it should stay at its current level.

2. The auditor was engaged to audit the client after the entity's year-end, so the auditor could not observe the inventory count that was held at year-end.

3. The entity is a defendant in a major litigation (relating to a faulty product) that has not been settled as of the date of signing the auditor's report.

4. A fire in the company's office because of a faulty photocopier has destroyed all records of accounts receivable as at year-end.

5. The disclosure of directors' benefits does not comply with the accounting standard for related party disclosures (AASB 124 Related Party Disclosures (IAS 24)).

6. A new competitor in the market over the past year has raised serious concerns about the entity's ability to continue as a going concern.

7. The directors refused the auditor access to 3 months worth of the minutes of directors' meetings because they contained discussion of a highly confidential matter.

8. The company changed its method of depreciation from straight line to reducing balance, necessitating a restatement of previous year's statements.

Required - Indicate the effect of the above circumstances on the auditor's report.