CASE STUDY ON AUDITORS REPORT Source: HCT You are about to complete the audit of your client (Grand Muscat LLC) by next week. Your team is busy with assessing and accumulating the required audit evidence for expressing your audit opinion. When you assessed the evidences, you found that the inventory is misstated, and it is deemed to be material but not pervasive to the financial statement. Your team audited the financial statement of the client comprising of Income Statement, Balance Sheet including the notes, Statement of Changes in Equity and Cash Flow Statement including the summary of significant accounting policies and other explanation. The following additional information are also available based on your evaluation of audit evidence. 1. The financial statements are prepared in accordance with applicable reporting standard. 2. The auditor complied with the required ethical requirement as per ISA 200 3. Based on the audit evidence obtained, the auditor has concluded that due to substantial erosion of company's net worth for last two years, the companies' ability to continue its operation in subsequent years is at stake. 4. The professional judgement of the auditor reveals that the estimates made by management on future profit of the company has high level uncertainty. The company disclosed this in one of the notes annexed to financial statement, but auditor feel this is important for users understanding of financial statement. 5. Those charged with responsibility of oversight differs from those charged with preparation of financial statement. Based on the available information, you are required to prepare an audit report in a proper format with the following heading paragraph with detailed explanation. 1. Opinion Paragraph 2. Basis of opinion Paragraph 3. Key matters applicable 4. Other matters paragraph 5. Responsibilities of management and TCWG for the financial matters. Assessment going paragraph applicable audit 6. of concem