Read the following two independent cases:

Case 1

Due to the recent downturn in the Australian economy, Jones Ltd has made substantial losses for the last three quarters; and now has a negative working capital balance. The auditor of Jones Ltd has concerns over the entity’s ability to continue as a going concern in the short to medium term. Management of the company believes that the company is fully solvent and has not disclosed these matters in the financial statements.

Case 2

The auditors of Smith & Smith Ltd were refused access to six months of the minutes of the directors’ meetings (held monthly) because they contained discussions of highly confidential matter. No alternative procedures could be performed.

For each case presented above, state

(i) The type of audit opinion that should be expressed and

(ii) Provide a brief explanation to justify for your choice:

Answer rating: 100% (QA)

Case 1 Qualified Opinion Management of Jones Ltd believes that the co... View the full answer