: Issuing an Appropriate Auditor Report (16 marks) For each of the following scenarios, identify AND justify the appropriate type of audit opinion to be issued. In addition to the type of audit opinion, describe any additional paragraphs/sections that should be added to the auditor report. (4 marks each) a) Lyles Landscaping Supplies operates a network of successful retailors of landscaping and other outdoor supplies. During December of the past year, their warehouse was flooded due to a heavy storm. While their inventory is likely still usable, as it was fairly durable outdoor supplies, the auditor was unable to access the warehouse to fully audit the inventory. All other accounts for the financial statements were unaffected. b) Shinra Inc. is an energy supplier than draws on natural gas collected from deep underground in order to generate and supply its clients with electricity. Shinra has been successful, and the auditors find no major issues with their accounting records. However, in recent years Shinra has gotten behind on their debts and is now struggling financially. Following a failed attempt to expand their business, rising costs and lower consumer demand has reduced the companys ability to generate cash flow and the auditor is concerned that they may not be able to pay the interest on their loans. c) Ball Mart is a chain of sports apparel and equipment stores. All of their goods are electronically scanned at checkout in order for customer purchases to be automatically calculated. Based on the companys computerized system, revenue and cost of goods sold journal entries are automatically posted to the ledger. During the year-end audit, auditors discover that the companys systems were purposely incorrectly processing transactions. Although the company was still financially viable, almost all revenue transactions were affected and neither the company nor the auditor could properly reconcile the accounts. d) Outer World Explorers is a non-profit research firm that engages in astronomy research and tries to make new discoveries about the universe. In order to do their research, they operate remote facilities where it is easier for researchers to study the sky without interference. Because of the advanced technology developed for their work, the company is seeking to capitalize all of their technology costs as research and development. The auditor disagrees with this practice and believes that the proper accounting treatment is to expense the research and development costs. After discussion, the client continues forward and refuses to make the change requested by the auditor. All other financial accounting records were determined to be free of material misstatement.