Consider the following scenarios regarding two different companies which you were an audit team member for auditing of their financial statements:

i.During the audit of Judak Co. it comes to your attention that the company has valued a certain inventory line at its total cost price of TZS.140,000,000. These inventory items have not been sold for a number of years and it is unlikely that they can be sold in the future unless the price is reduced to TZS.60,000,000. If the write-down price is charged it would have a material effect on the financial statements.

ii.During the audit of ALMAS Co, you discovered that the company had not kept any records relating to their cash sales. The company has pre-tax profits of TZS.40,000,000, cash sales of TZS.80,000,000 and total sales of TZS.80,000,000.

Required:

Explain the effect of the two scenarios above in the auditors report.