T ng QUESTION 1:(10 MARKS) The Slewing are independest sitations and for each uituation, asume that yee are the audit partrr en the engigemest and yeu are required so ldentity the materiality sl type af adt repert and jasificaion for your decsion as the specife aud report a You ware engiged to asdit the Reaco Steel's francial staterents ater of he dese of the carparation's fiscal year. Becasse you were not engaged ant aher the balance sheet date, you were not able to physically observe inestary, which material On he completion of your sudt, you are satisfied that Remcs's financial statemems are bresented fairty, induding invertory about which yeu were able atisty yourselt by the use af atersative asdit procedares In the last three months of the curest year, 0E Refeing Company decided to change direction and go significantly into the oll drlling buiness Management recogniaes that this business is esceptianally risky and could jeapardine the eaccess of Its eststing retning basiness, bt there are significant petential rewards Dering the short peried of aperation is deriling the company has had theee dry wells and no seccesses The facts are not disclasd in frootnotes L Your client, Auto Restal Company, has changod frem straight line so sum of-he years dgits depeecition. The effect on this year's income id material but the eflect in future years is Ikely to be inconsequential. The facts are adequately disclesed in footnotes DXBcom is an internet-based start-up company created to sell heme retals goods online. Although the comparoy had a promising start, a downtum in e-commerce retailing has nepatively affected the company. The company's sales and cash position have deteriorated signitcantly, and you have reservations about the ahilay of the L company to continse in.aperatin.for the nest year The controller of StarCity Hotels willpot alow youbo confirm the receivable balance from two of its major castomers. The amounts of the receisables are material in relation to StarCiay's financial statements. Yos are unable to satisfy yourself s to the receivable balasces by ahernative procedures. T ng QUESTION 1:(10 MARKS) The Slewing are independest sitations and for each uituation, asume that yee are the audit partrr en the engigemest and yeu are required so ldentity the materiality sl type af adt repert and jasificaion for your decsion as the specife aud report a You ware engiged to asdit the Reaco Steel's francial staterents ater of he dese of the carparation's fiscal year. Becasse you were not engaged ant aher the balance sheet date, you were not able to physically observe inestary, which material On he completion of your sudt, you are satisfied that Remcs's financial statemems are bresented fairty, induding invertory about which yeu were able atisty yourselt by the use af atersative asdit procedares In the last three months of the curest year, 0E Refeing Company decided to change direction and go significantly into the oll drlling buiness Management recogniaes that this business is esceptianally risky and could jeapardine the eaccess of Its eststing retning basiness, bt there are significant petential rewards Dering the short peried of aperation is deriling the company has had theee dry wells and no seccesses The facts are not disclasd in frootnotes L Your client, Auto Restal Company, has changod frem straight line so sum of-he years dgits depeecition. The effect on this year's income id material but the eflect in future years is Ikely to be inconsequential. The facts are adequately disclesed in footnotes DXBcom is an internet-based start-up company created to sell heme retals goods online. Although the comparoy had a promising start, a downtum in e-commerce retailing has nepatively affected the company. The company's sales and cash position have deteriorated signitcantly, and you have reservations about the ahilay of the L company to continse in.aperatin.for the nest year The controller of StarCity Hotels willpot alow youbo confirm the receivable balance from two of its major castomers. The amounts of the receisables are material in relation to StarCiay's financial statements. Yos are unable to satisfy yourself s to the receivable balasces by ahernative procedures