40 marks) The followings are independent situations for which you will recommend an appropriate audit report:

1. A number of frozen yogurt stores have opened in the last few years and your client, YogurtLand, has experienced a noticeable decline in customer traffic over the past several months that has caused you to have substantial doubt about YogurtLand's ability to continue as a going concern. YogurtLand has disclosed the relative matters and actions being taken in the footnote to the financial statements.

2. Circumstances prevent you from being able to observe the counting of inventory at Brentwood Industries. The inventory amount is material in relation to Brentwood Industries' financial statements. But, you were able to perform alternative procedures to support the existence and valuation of the inventory at year-end.

3. Intelligis Electronics is a manufacturer of advanced electrical components. During the year, changes in the market resulted in a significant decrease in the demand for their products, which are now being sold significantly below cost. Management refuses to write off the products or to increase the reserve for obsolescence.

4. During the course of his audit of the financial statements of a corporation for the purpose of expressing an opinion on the statements, a CPA is refused permission to inspect the minutes of board of directors' meetings. The corporation secretary instead offers to give the CPA a certified copy of all resolutions and actions involving accounting matters.

5. Subsequent to the date of the financial statements as part of his post-balance sheet date audit procedures, a CPA learned that a recent fire caused heavy damage to one of a client's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. The financial statements and footnotes as prepared by the client did not disclose the loss caused by the fire.

For each situation, state the appropriate audit report from the following alternatives and explain your reasons (if you have not decided on one level of materiality, state the appropriate report for each alternative materiality level):

a. Unmodified opinion

b. Qualified opinionmisstatement

c. Qualified opinionscope limitation

d. Adverse opinion

e. Disclaimer of opinion