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ACC300-Three Types of Audit Opinion
ACC300-Three Types of Audit Opinion
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ACC300-Three Types of Audit Opinion. The following independent situations cover different situations which Auditors may encounter.You are asked to state which Audit opinion should be given and briefly explain why.
(a)The Connor company has been having increasing difficulty paying its debts during the last financial year and has been relying on its bank overdraft to pay debts . It has just been advised that the bank want repayment of the bank overdraft within one month. All other efforts to obtain finance have been unsuccessful .You have found no material misstatements in the company’s financial statements.
(b)A local company has an American parent company and so it uses the same inventory valuation method of LIFO instead of FIFO. The difference between LIFO and FIFO has been calculated and its effects calculated and while it has lead to a material misstatement the effects are limited to their effect on the Inventory and do not have a material effect on the rest of the financial statements.
(c)The Victorian Manufacturing company manufactures prefabricated concrete in its factories It includes its factories in the balance sheet at market value less accumulated depreciation.The Factory in Melbourne is included in the balance sheet based on a valuation carried out five years ago .The directors have not asked for another valuation because they have believed that the market values have remained fairly stable over the past five years.
