a)Under what circumstances would a disclaimer of opinion be issued by an auditor. [10 marks]

b) You have completed the audit of MyJones Ltd, a large retailer, with a number of department stores as well as an online store, for the year ended 30 June 2020. You experienced a number of difficulties during the audit, including significant disagreements over the valuation of inventory. The audit partner had suggested that the inventory value was overstated by $25 million, a figure which was twice the level of materiality set for the audit. As a result of discussions with the audit committee, the CEO has agreed to revise the valuations downward by $10 million. All other issues were resolved to the satisfaction of the audit partner. The audit partner is now considering the effect of this misstatement on the auditors report.

Required

Explain the effect of the misstatement on the auditors report for MyJones Limited for the year ended 30 June 2020. [10 marks]