Consider the following independent and material situations:

(i) An auditor is engaged to audit a clients financial report after the annual physical inventory count. The accounting records are not sufficiently reliable to enable the auditor to become satisfied as to the year-end inventory balances.

(iii) A client has a trade receivable who has recently filed for bankruptcy. However, the client does not agree to reduce the recorded value of the receivable to its net realisable value, which is approximately 20 percent of the recorded amount.

(iv) An auditor hires an actuary to assist in checking a clients complex calculations for accrued staff retirement benefits. The accrued staff retirement benefits account for 35% of the clients total liabilities. The actuarys findings are reasonably close to the clients calculations and support the financial report.

Required:

For each of the situations (i) to (iv) above:

(a) Indicate the type of audit opinion you would issue. (4 marks)

(b) Give reasons for issuing the particular audit opinion. (8 marks)