[Audit Reports]

Presented below are independent audit scenarios involving nonpublic clients that prepare GAAP-basis financial statements. You are assumed to be the reporting auditor on all these engagements, and they are for the current year only, i.e., the client is presenting single-year (rather than comparative) financials.

RequiredIndicate the type of report you should issue in each scenario assuming that the matter described is material but not pervasively so (unless otherwise implied), and do so by using one of the options below accompanied by a brief explanation:

SR = auditors standard report UOREM = unqualified opinion with required emphasis-of-matter paragraph UODEM = unqualified opinion with discretionary emphasis-of-matter paragraph UOROM = unqualified opinion with required other-matter paragraph UODOM = unqualified opinion with discretionary other-matter paragraph QOGD = qualified opinion due to a GAAP departure QOSL = qualified opinion due to a scope limitation AO = adverse opinion DO = disclaimer of opinion

1. A significant portion of the revenues of Child Company come from a single customer, Parent Company, a business owned by the parents of Childs CEO. Child has disclosed these transactions and the CEOS relationship to Parents owners. 2. Switched Company used current (marked-to-market) prices to value its inventory in prior years but this year changed to FIFO. 3. Just Us Company has decided not to prepare a statement of cash flows because as a family owned business with no outside investors, it believes that its shareholders do not find the statement useful. 4. XY&Z Company learned that it is being sued for breach of contract over a dispute that arose prior to year-end. XY&Z has made no disclosure of the case, but the companys legal counsel has confirmed XY&Zs position in the attorneys letter, specifically, that the likelihood of XY&Z losing the case is remotely possible but not probable. 5. X&YZ Company learned that it is being sued for breach of contract over a dispute that arose prior to year-end. X&YZ has made no disclosure of the case, but the companys legal counsel has confirmed X&YZs position in the attorneys letter, specifically, that the likelihood of X&YZ losing the case is reasonably possible but not probable. 6. During your audit of AB&C Company, you were unable to observe the physical inventory because you were hired after the companys year-end. You were not able to satisfy yourself as to the fair presentation of AB&Cs inventories through other audit procedures. 7. During your audit of A&BC Company, you were unable to confirm accounts receivable because management did not allow you to do so out of concern about complaints from customers. You were not able to satisfy yourself as to the fair presentation of A&BCs receivables through other audit procedures.