Would this affect the audit report and why

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Imaginary Services Co Pty. Ltd started trading last year, and has undergone a recent surge of growth due to increased demand for their Imaginary Service. Your firm was appointed auditor for Imaginary Services Co Pty. Ltd in August 2010. As a result of this timing, you did not get the opportunity to observe the physical inventory count as of 30 June 2010 as it was done prior to your appointment. Owing to the nature of the company's records, you have not been able to satisfy yourself as to inventory quantities. The inventory balance is material, however, you have found that controls over inventory are good, and that there is a low risk of misstatement for this asset. What type of audit report would you issue, and why? If the company was Imaginary Consumables Co Pty Ltd, and the controls over inventory were not so good, would this affect the audit report, and why?

Reference no: EM13486528

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