Audit Report: Produce four draft audit reports, one for each of the situations described below. Assume that no other situations affecting the audit opinion have arisen. You should be ready to explain and justify each element of your reports.

ii. Considering the situation mentioned in Subsequent Event (Assume that one of your procedures revealed material and unrecorded revenue which was the result of the absence of a control to prevent this situation. The clients management agreed to change the entry so that the balances are in compliance with GAAP). Evaluate implications for the audit process and for any other communication with the client (Air New Zealand). Evaluate implications of the situation in forming audit opinion.

NOTE: ONLY ONE DRAFT REPORT FOR THIS SITUATION.