Audit Reporting Scenarios : The Wheels are Coming Off at Tesla -- Summarize the Impact on Teslas audit report, if any (ie how should the audit opinion be modified, and/or are other modifications to the audit report neede

1.. Assume you have completed your audit, but Elon Musk refuses to provide you with a signed management representation letter.

2. Tesla refuses to adjust their goodwill account for impairment despite the auditors highlighting a required adjusting entry. The amount of the misstatement is immaterial.

3. Restrictions imposed by Tesla prohibited the observation of the physical inventory count by the auditor (Elon Musk is paranoid about protecting trade secrets). Inventory accounts for 30% of total current assets. Alternative audit procedures for testing the existence assertion were not feasible. Auditors were able, however, to obtain sufficient appropriate evidence for the valuation assertion and for all other items in the F/S.

4. Assume your audit includes auditing the F/S of Teslas major subsidiary, Sodoolak Reality, for the year ended December 31. During the engagement, your firm realizes that it is not independent of Sodoolak.

5. Which of the following situations would result in auditors adding an additional paragraph to their report without modifying the introductory, scope, or opinion paragraphs of the report? (Choose all that apply).

a. Reference to a change in the method of accounting, resulting in a material impact on the F/S, mandated by the issuance of a new accounting standard.

b. Reference to a going-concern uncertainty facing the entity (and for which the plans to mitigate the uncertainty are not sufficient), that is appropriately disclosed in the F/S notes.

c. Reference to a departure from GAAP, that is material, but not pervasive, to the F/S.

d. Reference to a material acquisition made by the entity during the most recent fiscal year.