Assume you are an auditor and you are facing the following separate circumstances, the effects of all the items below are material:

1. Management have excluded from the financial report the necessary disclosures in relation to a contingent liability (10marks)

2. A manufacturing company is currently negotiating with the bank an extension of a loan facility that is due for repayment shortly after the AGM; without this refinancing the business will not be able to continue operations. (10 marks) T3 2020 Online Final Examination: ACC707 PG - Auditing and Assurance Page 4 of 5 3.

A wholesaler has a policy of including all its buildings in the balance sheet at cost less depreciation. You establish that one of the warehouses included in the balance sheet at a value of $20m has an actual market value of $23m. (10 marks)