Click Submit to complete this assessment. 1 14 ider each of the following independent situations: Inventory on hand at year-end has been valued at cost in the financial report of your client. However, net realisable value is 10% below cost according to the audit findings. The difference is a material amount. In the previous financial year your client purchased property and entered into a contract to develop a shopping complex and then sell the developed real estate to an unrelated third party for a 'cost-plus' settlement the financial year, an economic recession resulted in the rentals and occupancy rates being well below forecasts prepared by your client. Just before year end, the purchaser threatened to sue for damages, alleging th forecasts when entering into the contract. The amount of damages being claimed is highly material to your client. Your client has obtained an opinion from a well-known Senior Counsel (SC) which concludes that no The directors have therefore included no reference to the matter in the financial report to be released next week. However, you have heard that the purchaser has also obtained advice from an SC which supports its Same as scenario B, except that the purchaser threatened action after the end of the financial year, rather than during the financial year. You are auditing PF Limited, where net income is generally about 50%% of gross revenues. Due to the small size of the charity's staff, there is a lack of control over the completeness of revenue. Despite your best effort enough evidence to conclude that revenue is complete. Management of WER Limited has decided not to disclose director's fees in the accounts, as they are not material. You cannot convince management to change its decision. However, you do agree that the amounts ar Management of JFL Limited has estimated that the allowance for doubtful debts should be $540,000. As auditor you believe that the allowance should be $650,000. Management will not change its estimate. Profit be $440,000. Your client has several bank accounts, one of which is in foreign country. Cash balances total $740,000 with the account maintained in the foreign country totalling some $528,750. You have been unable to obtain a b third-party confirmation with respect to the foreign bank account. The client has been unable to supply you with bank statements or other supporting documentation in relation to this bank account. Materiality for th $480,000. All cash balances are classified as current assets in the client's financial statements. Would your answer to scenario G be different if the client's only asset and liability was the asset of cash balances totalling $740,000 (that is, the client is a 'cash box")? ed: of the above situations A-H, determine the appropriate audit opinion to be issued and justify your
