Part $6$ Audit Reports $(30$ points$)$

For each of the following independent situations, assume that any amounts would be material.

$($I$)$ Indicate the TYPE of appropriate audit report; A$.$ unqualified, B$.$ qualified or adverse, C$.$ qualified or disclaimer, D$.$ Disclaimer, E$.$ Qualified only, or F$.$ Other.

INDICATE the situation involved, i$.$e$.$ Accounting situation, and DISCUSS the situation.

$($II$)$ State whether an explanatory paragraph would be included, and if so$,$ what would be included in the explanatory paragraph.

The status of the client as a going concern is extremely doubtful. The matter is NOT disclosed in the footnotes.

Type

Discussion

Include Explanatory paragraph?

If Yes, Discuss

YES or NO

$2.$ The company changes from Average Cost to First$-$in$,$ first$-$out For inventory valuation. The auditor agrees with the reason for the change.

Type

Include Explanatory paragraph?

Discussion

YES or NO

$3.$ The company uses an appraiser's estimate of the value of land it owns, rather than Historic Cost. It is felt this is more recent information

Type

Discussion

Include Explanatory paragraph?

If Yes, Discuss

YES or NO

$4.$ The client requested that accounts receivable confirmation letters not be sent to a number of customers with large balances. Alternative procedures were used in testing these receivable amounts.

Type

Include Explanatory paragraph?

YES or NO

Discussion

If Yes, Discuss

$5.$ One of the members of the audit team has a significant financial interest in the company being audited. Type

Include Explanatory paragraph? YES or NO Discussion If Yes, Discuss