For each of the following situations, indicate the type of opinion(s) that auditors could issue and

why you think so. Unless otherwise noted, assume that no departures from Financial Reporting

Standards were identified in the audit engagement.

1.Auditors have identified an immaterial departure from Financial Reporting Standards in

their examination, but the entity has not adjusted its financial statements for this

departure or disclosed this departure in its financial statements or related disclosures.

2.Because they were appointed to the engagement after the date of the financial

statements, the auditors have experienced a significant scope limitation and were unable

to perform standard auditing procedures used in their engagements. The account(s)

affected by this scope limitation were material and pervasive. However, the auditors

have been able to completely satisfy themselves as to the fairness of the related account

balances and classes of transaction by performing alternative procedures.

3.During the year, the entity changed its method of accounting for inventories from FIFO

to LIFO and has disclosed this change in the footnotes to the financial statements and

accounted for the change properly. However, the auditors do not agree with the rationale

for the change and believe that it was made to report a higher level of earnings.

4.Subsequent to accepting the audit engagement, the auditors determined that they are not

independent with respect to the client because of a financial interest in the client held by

a newly admitted partner to the audit firm.

5.Evidence gathered during the audit examination and inquiry of the client's management

revealed substantial doubt about the client's ability to continue in existence. The

auditors believe that the client has appropriately disclosed the going-concern

uncertainties in its financial statements and footnotes.

6.The auditors wish to emphasize the company's acquisition of two large subsidiaries

during the most recent year.

7.The auditors have engaged component auditors to conduct a portion of the audit but do

not wish to assume responsibility for their work. The auditors have not approached the

component auditors about presenting their reports with the company's financial

statements and do not plan to do so.

8.The client has not recognized a material loss related to a decline in the market value of

its investments. Because the auditors believe this decline in value is not temporary, they

believe the financial statements do not present the client's financial position and results

of operations in accordance with Financial Reporting Standards.

9.The auditors have experienced a significant scope limitation and are unable to satisfy

themselves as to the fairness of the affected account balances through alternative

procedures.