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Assume you are an auditor and you are facing the following separate circumstances, the effects...

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Accounting

Assume you are an auditor and you are facing the following separate circumstances, the effects of all the items below are material:

  1. The provision for the stock is inadequate
  2. A retailer values inventory at sale price less an allowance for sales margin.
  3. A manufacturing company is currently negotiating with the bank an extension of a loan facility that is due for repayment shortly after the AGM; without this refinancing the business will not be able to continue operations.
  4. A significant proportion of a retailers sales are on a cash basis and inadequate records have been maintained; there are no audit tests that can be done to satisfy yourself that the cash sales are accurate.
  5. Management has excluded from the financial report the necessary disclosures in relation to a contingent liability.

Required: Indicate the effect of the above circumstances on your auditors report if management were to refuse to make any changes you feel necessary in order that the financial report gives a true and fair view.

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