What should the auditor do if unable to observe the beginning inventory?Option     Focus solely on the balance sheet in the audit report     Express a disclaimer of opinion on certain financial statements     Express an unqualified opinion on the financial statements     Request additional information from management

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

A company’s financial statements include an investment of $45,000 in a company which is in liquidation. It is not yet clear what, if anything, will be recovered. Pending the final report of the liquidators, no allowance has been made in the financial statements. The situation is fully explained in a note to the financial statements. Profit before tax is $200,000. What form should the audit opinion take? a. Adverse b. qualified c. disclaimer d. unmodified

Where is inventory reported in the financial statements?Multiple choice question.Balance sheet as a current assetBalance sheet as a noncurrent assetStatement of cash flows as an investing activityIncome statement as revenue

An audit program for inventory includes the following procedure:“Test count a sample of physical inventory and agree to management’s count records.”"Observe the arrangements of the client's management before the inventory count."&nbsp;"Select goods received notes for a few days before the count date and confirm that they are recorded and existed as "goods in" in inventory records. The corresponding goods should be included in the purchase in trade payables.""Obtain written representations concerning the completeness and accuracy of the physical count and valuation."Which of the above procedure is not included at the time of attending the physical stock take.<br /> A. a. 2 <br />B. b. 4 <br />C. c. 3 <br />D. d. 1

Which of the following audit objectives does not relate primarily to the financial report assertion of completeness?  Group of answer choicesInventory quantities include all products, materials and supplies owned by the company that are in transit.Inventory quantities include all products, materials and supplies on hand.Inventories are reduced when appropriate to net realisable value.The totals of inventory listings are properly included in the inventory accounts