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

1. 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. The director of the company agrees to make disclosure the indicating the extent of the problem the company is currently facing with the bank loan. After reviewing the information, you are satisfied that the disclosures are adequate.

2. The directors of a Telecommunications company refuse to give you access to reports of sales contracts they have received from government in relation to the Revenues recognised in their financial statements.

REQUIRED Explain clearly the effect of each of the above circumstances on your auditors opinion and explain the actions of the auditor?