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(1) LB has valued a certain inventory line at its total cost price of $17,000. These inventory items have not been sold for a number of years and it is unlikely that they can be sold in the future unless the price is reduced to $3,000. The finance director is confident that the issue wil be resolved and no write down was made with regards to this balance. (2) The second audit client is Hayden Co (Hayden). On 1 January 20X2 Hayden implemented a new accounting system; this was generally a success, with the exception of February 20X2 when one month of Hayden's inventory records were lost. Despite several attempts the audit team was unable to perform alternative audit procedures to verify material inventory transactions in February 20X2, although the year-end inventory count went smoothly. (3) The third audit client is Maker Co (Maker), a listed construction company which specialises in residential house building. One of Maker's construction workers, Edward Shift, was dismissed in August 20X2 after turning up for work under the influence of alcohol. In September 20X2, Mr Shift began a case against Maker for unfair dismissal. Mr Shift has sent a huge amount of paperwork to Maker detailing the extent of his claim along with supporting medical documentation and character references that the audit team has had to devote a significant amount of audit attention to this area of the audit. The directors have not made any reference to the claim in the financial statements and you agree with Maker's lawyers' indication that it is highly unlikely that Mr Shift will be successful in his claim. 1. Explain, with reasons, the impact the inventory issue wil have on LB's auditor's report if it remains unresolved? 2. Explain, with reasons, the impact the loss of inventory records will have on Hayden's auditor's report if it remains unresolved? 3. Based on the above information explain whether the audit opinion on Maker's financial statements should be modified or unmodified and whether any additional disclosure should be made in the auditor's report. 4. Based on the above information explain whether the audit opinion on TH's financial statements should be modified or unmodified and whether any additional disclosure should be made in the auditor's report

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