PROBLEM 13.2 The following are independent situations relating to the year ended 30 June 2014. Assume all entities are reporting entities and that all situations are material.

1. The depreciation rates used by Langer Ltd have not changed for the past three years. Given recent technological changes in the industry in which Langer operates, you are convinced the useful lives of Langers assets need to be adjusted downwards. The directors refuse to make this change despite the fact that you have explained this places them in breach of impairment tests contained in approved accounting standards.

2. You are finalising the audit of Jones Ltd, a large proprietary company which exports grains and cereals to most regions of the world. Subsequent to balance date, regional tensions in the Middle East saw orders plummet by over 40%. The fall in profit placed Jones in breach of the conditions of its bank loan. Not wishing to risk losing its money, the bank placed a freeze on Jones bank account and other assets, rendering Jones Ltd unable to trade. These circumstances are adequately disclosed in a note to the accounts.

3. The audit of Waugh Ltd was extremely difficult this year as the client did not keep appropriate books and records. The accounting department was chronically understaffed, so transactions were not promptly entered and reconciliations not performed. A temporary accountant was employed to help sort out the mess but was unable even to reconcile the bank account at the year-end. You are not satisfied that all transactions that occurred during the year are reflected in the financial report.

4. You have received the draft annual report from Hayden Club Ltd. On reading the Year in Review you note the club chairman states that revenues have actually fallen by 10%. The club refuses to change anything in the annual report for fear of missing printing deadlines.

Required: (a) For each of the independent situations above, describe the additional audit procedures you would perform prior to issuing your audit report. (b) Assuming the matters remain unresolved, discuss the audit opinion you intend to issue for each of the above entities for the year ended 30 June 2014