Based on your understanding from Q6 above, identify and justify the audit opinion that the auditor should issue in each of the following independent situations. With the exception of the issues outlined, assume that the auditor is satisfied in all other material respects.

a) A client has changed the depreciation method for machinery during the year. Management has not disclosed the nature of the changes and their effects in the financial statements and refuse to include this disclosure. The resulting change to depreciation expense for the year is material.

b) A new client was particularly difficult to audit as they did not maintain proper accounting records and were understaffed for the most part of the year. Several year end balances were unable to be reconciled and/or verified. As the auditor, you are also not convinced that all transactions that occurred during the year have been recorded in the financial statements.

c) A consignment of inventory is incorrectly excluded from inventory and trade payables. The client decides not to adjust the accounts on the basis of this error. As the auditor, you have determined that the error is not material to the financial statements.

d) Your listed audit client has prepared the financial report using the cash basis of accounting as the directors believe it provides a more faithful representation of its financial position than accrual accounting, as it is a cash rich business. Based on your audit work you have determined that the difference between cash and accrual accounting, if adjusted, would significantly change net assets and profit.