Described below are situations which have arisen in the three external audit clients of Gibson Hedges & Co. The year end in each case is 31 December 2019.

(i) Brakes and Disc Co (Brakes) is manufacturer of braking systems for use in domestic and commercial motor vehicles. Total assets for year was Rs37 million and profit before tax for the year was Rs9 million. A customer of Brakes had withdrawn one of their car models due to earnest concerns over the braking system. The customer has lodged a legal claim against Brakes for Rs11 million. The company's lawyer believed that there is an 80 % chance that Brakes will lose the case. The directors believed that Brakes quality control procedures have always been robust, and the braking system will be proven to have been safe. They decided to disclose the matter in notes to accounts`. [7 marks]

(ii) Profile Co is a manufacturer of telephones for use in domestic and commercial building. Profit before tax for the year was Rs100 million. Profile Co's computerised wages program is backed up daily, however, for a period of three months the wages records and the back-ups have been corrupted, and therefore cannot be accessed. Wages and salaries for these three months are Rs17million [5 marks]

(iii) Knitwears Co manufactures men's clothing and the year-end audit for the company is due to commence shortly. The draft financial statements recognises profit before tax of Rs86.million and total assets of Rs756 million. A redundancy provision of Rs8.4 million is included in the draft financial statements. The audit team is performing the audit fieldwork including the audit procedures over the redundancy provision. The team has calculated that the necessary provision should amount to Rs14.7million. The finance director is not willing to adjust the draft financial statements. [5 marks]

Required:

Critically explain the type of audit opinion that should be issued in each of the above situations.