16. You are the Audit Manager in Mable \& Co, a firm of certified public accountant. You are in charge of three (3) audit clients and you have been provided with the following information regarding the client for your review and recommendation on the effect each will have on the audit opinion. Mpindi Ltd: Mpindi Ltd faced serious cash flow problems over the past few years. In the year under review, management made an assessment on the ability of the company continuing as a going concern. Management based its assessment on an undertaking by the parent company to inject more money into the company failure to which the company will face serious going concern issues. In evaluating management's assessment and after discussions with the management of Mpindi Ltd, it was agreed that there exists material uncertainty with regards to the going concern of Mpindi Ltd. It was agreed that the use of the going concern basis of preparing financial statements was appropriate and that management needed to make appropriate disclosures in the financial statements, failure to which this will have implications for the audit opinion. Management prepared the financial statements on the going concern basis and made adequate disclosures in the financial statements regarding the material uncertainty that existed. Mwaipungu Ltd: The financial year of Mwaipungu Ltd is ended 31st December 2019. The draft financial statements contained a provision made with regards to a legal case arising from litigation by former employees who sued Mwaipungu Ltd for underpayment of retirement benefits and are claiming compensation and interest. Page 7 of 8 The amount involved is significant and could influence the users of financial statements and management made adequate disclosure regarding this provision in the notes to the financial statements. It is your view that this matter is fundamental to the understanding by users of financial statements and you would like to refer to it in the audit report. Kasuku Plc: Kasuku Plc is a public listed company in the manufacturing industry. In accordance with ISA 260: Communication with those charged with governance, your firm communicated a number of issues to those charged with governance concerning significant matters that were faced during the audit. One of the matters that the firm experienced during the audit is a disagreement on an accounting estimate with regards to allowance for receivables. Management made an allowance which in the view of the auditors was significantly understated. After discussions with management and the Board, it was resolved that the allowance should be increased to an amount acceptable by the auditors and this was appropriately dealt with and disclosed in the financial statements. The Audit Senior considers this to be a key audit matter. Required: Evaluate and state the impact of each of the three matters above to the audit opinion and audit report (May 2022, B3)