Hip plc

This retailing company has a pre tax profit of RM10 million, revenue of RM150 million and a closing stock figure of RM8 million for the year ending 31^st December 2019. At the companys annual stock take, you became aware that a considerable amount of stock appeared to be obsolete, damaged or missing. You recommended that the company provide for a stock write off of RM2 million. However, the management have refused to do this. In all other respects, you have been satisfied with the audit of Hip plc.

1. For the situation described above, consider the type of audit report you would issue and justify the reasons for your decision (including consideration of materiality and accounting treatment).