For each of the following independent situations, indicate the type of financial statement audit report that you would issue and briefly explain your reasoning. Assume that each item is at least material.

a. Client-imposed restrictions significantly limit the scope of your audit procedures, and you are unable to obtain sufficient appropriate audit evidence. The possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive.

b. You believe that the financial statements have been presented in conformity with generally accepted accounting principles in all respects, except that a loss contingency that should be disclosed through a note to the financial statements is not included. While you consider this a material omission, you do not believe that it pervasively affects the financial statements.

c. Barefield Corporation, a wholly owned subsidiary of Sandy, Inc., is audited by another CPA firm. As the auditor of Sandy, Inc., you have assured yourself of the other CPA firms independence and professional reputation. However, you are unwilling to take complete responsibility for its audit work.

d. You are auditing Diverse Carbon, a manufacturer of nerve gas for the military, for the year ended September 30. On September 1, one of its manufacturing plants caught fire, releasing nerve gas into the surrounding area. Two thousand people were killed and numerous others paralyzed. The companys legal counsel indicates that the company is liable and that the amount of the liability can be reasonably estimated, but the company refuses to disclose this information in the financial statements.

e. On January 31, Asare Toy Manufacturing hired your firm to audit the companys financial statements for the prior year. You were unable to observe the clients inventory on December 31. However, you were able to satisfy yourself about the inventory balance using other auditing procedures.

f. Gelato Bros., Inc., leases its manufacturing facility from a partnership controlled by the chief executive officer and major shareholder of Gelato. Your review of the lease indicates that the rental terms are in excess of rental terms for similar buildings in the area. The company refuses to disclose this related-party transaction in the footnotes.

g. Johnstone Manufacturing Company has used the double-declining balance method to depreciate its machinery. During the current year, management switched to the straight-line method because it felt that it better represented the utilization of the assets. You concur with the decision. All information is adequately disclosed in the financial statements.