national Economics University

The following are independent cases: 1- Dhofar's used cars, a client of yours, recently changed its depreciation method from straight-line to sum-of-the-year's digit. The effect of the change on the current year's income is not material, but in future years, you suspect the effect will become material. The facts are adequately disclosed in footnotes. 2- Jarzeez, Minerals recently decided to change its direction and spent the last 8 months developing business in the potash mining business. There are significant potential rewards, but the company's management recognize that there are significant risks in the business that could jeopardize the successes of its existing mining business. Since starting the new venture, the company has had no successes and some decline in profits. The facts are adequately disclosed in footnotes. 3- You recently noticed that Salalah Technology Solutions routinely excludes their statement of cash flows in the company's annual financial statements. Their reasoning, as explained to you, is that the statements are confusing to their readers, so they prefer to leave the information out. 4- A group of longtime friends decided to try their hand at online trade in antiquities. Although their venture started out well enough, a market-wide downturn in e- commerce sales abruptly plunged the star-up into the red. The future of the company looks bleak; both sales and cash position have declined substantially. If the market does not turn down around soon, you think the company may not be able to continue to operate. 5- The controller of a company you're auditing will not allow you to confirm the receivable balances from any of its customers. However, the amount of the receivables are material in in relation to the company's financial statements. You cannot use any other methods to check the receivable balances. 6- Your firm has been unusually busy, so you asked another CPA firm to do about 30% of the audit for Abdoun's Art, Inc. After a though review or their working papers, you are convinced that they did an excellent job on their portion of the audit. However, you are reluctant to take complete responsibility for their work. Required: for each case, indicate which type of audit report is an appropriate. (audit reports: Unmodified- Unmodified with explanatory paragraph- Qualified- Adverse- disclaimer