What action should the auditor take if the client refuses to meet and discuss issues related to the appropriateness of previously issued financial statements covered by the predecessor’s report?Option     Proceed with the audit and express an opinion on the financial statements.     Consider the risks of being the entity’s auditor and possibly withdraw from the engagement.     File a legal complaint against the client.     Immediately withdraw from the audit engagement.

For the following independent and material situations, assume you are the audit partner on different engagements.  For each situation, analyse and explain how the situation would affect your audit report. (A)  A former IT staff of the audit client accidentally deleted a lot of accounting data and there was no backup copy of the data. (2.5 marks)  (B)  The auditor thinks the audit client has over-valued its land and buildings. The audit client refuses to make corrections. (3 marks)(C)  The audit client has issued a new version of the annual report due to several subsequent events. (0.5 mark)(D)  Your audit client has reported a substantial loss this year due to rising costs and strong competition. There are also concerns about the audit client's ability to pay its current liabilities. The audit client's managers are negotiating with banks to raise additional funding to help cover the cash flow shortage. After evaluating the audit client’s situation, you believe the going concern assumption is still appropriate. How does this affect your audit report? (4 marks)

Which statement is incorrect regarding the discussion among the engagement team about the susceptibility of the entity's financial statements to material misstatements?Select one:a.The objective of this discussion is for members of the engagement team to gain a better understanding of the potential for material misstatements of the financial statements resulting from fraud or error in the specific areas assigned to them, and to understand how the results of the audit procedures that they perform may affect other aspects of the audit.b.The discussion provides an opportunity for more experienced engagement team members, including the engagement partner, to share their insights based on their knowledge of the entity, and for the team members to exchange information about the business risks.c.The members of the engagement team should discuss the susceptibility of the entity's financial statements to material misstatements.d.All the team members should have a comprehensive knowledge of all aspects of the audit.

The management of an entity feels that it is not necessary for it to give in writingexplicitly to the auditor that it understands its responsibilities for preparation offinancial statements in accordance with applicable financial reporting framework.Discuss, whether, it is necessary for the management to do so. In case managementrefuses, why should an auditor not accept the proposed engagement

Use the accompanying solution sheet to reply to the eight situations below that relate to the audit of financial statements of nonpublic companies. Unless indicated otherwise, assume that material amounts are involved. Do not consider including an emphasis-of-matter paragraph in an "auditor discretionary" circumstance. Situations: 1. A company has departed from GAAP. 2. A company's inventory records were deficient and the auditor was required to satisfy herself that the inventory was properly stated using alternative procedures. She is satisfied that she has sufficient appropriate evidence. 3. In auditing a client, an auditor has determined that substantial doubt exists about an entity's ability to continue as a going concern. 4. A group auditor decides not to take responsibility for the work of the component auditor who audited a 70% owned subsidiary and issued an unmodified opinion. The total assets and revenues of the subsidiary are 5% and 8%, respectively, of the total assets and revenues of the entity being audited. 5. A company changes from FIFO to LIFO for inventory valuation and the auditor concurs with the change. The change has a material effect on the comparability of the entity's financial statements this year, but is expected to have an immaterial effect in the future. 6. Inadequate record retention policies by the client have resulted in a situation in which a CPA is unable to obtain sufficient appropriate audit evidence with respect to a material account. 7. A CPA has decided to emphasize in the audit report that the company she audited is a component of XYZ Company, its parent. 8. A client has changed its estimate of likely doubtful accounts from 2% of credit sales to 3%. The auditor believes the change to be reasonable. Reply as to the type of opinion and other modification to the audit report as follows: A. Adverse D. Disclaimer Q. Qualified U. Unmodified Other Modification EOM Add an emphasis-of-matter paragraph. OM Add an other-matter paragraph. BFM Add a basis for modification paragraph. OTHER Make modifications other than adding an additional paragraph. NONE Make no modifications. If more than one type of opinion is appropriate list each—one with "Report 1" and one with "Report 2." If only "Report 1" is appropriate, place an X in the "Report 2" Opinion Type cell, which indicates no second type of report is appropriate. A) WHAT IS OPINION TYPE FROM REPORT 1 1-8 B) WHAT IS THE OPINION TYPE FOR REPORT 2 1- 8 C) WHAT IS OTHER MODIFICATION FOR REPORT 1 1-8 D) WHAT IS OTHER MODIFICATION FOR REPORT 2 1-8 CRITICALL EXAMINE IT AND PROVIDE THE CORRECT ANS FOR EACH SCENIOR A- D

After issuing a report, an auditor has no longer obligation to make continuing inquiries or perform other procedures concerning the audited financial statements, unlessSelect one:a.Information, which existed at the report date and may affect the report, comes to the auditor's attention.b.Information about an event that occurred after the end of fieldwork comes to the auditor's attention.c.Management of the entity requests the auditor to reissue the auditor's report.d.Final determinations or resolutions are made of contingencies that had been disclosed in the financial statements.