Q8. Described below are situations which have arisen in three audit clients of your firm. The year end in each case is 31 January 2018. Betta Networks plc

Betta Networks plc is a company in the telecoms sector which builds and operates national fibre optic networks. During the year, the company incurred costs of OMR8.5 million in respect of repairs and maintenance to its networks. These costs have been capitalised and included in fixed assets. The directors refuse to make any adjustments in respect of this matter.

The pre-tax profit of Betta Networks plc for the year ended 31 January 2018 is OMR7.2 million.

Rayton Ltd

The stock at the year end includes OMR240,000 in respect of the cost of items which had been returned by a customer because they were not in accordance with the customer's specification. The directors insist on including the items at cost as the company has an agreement to sell them to another customer for OMR320,000, following the modification of the items at an additional cost of OMR140,000.

The pre-tax profit of Rayton Ltd for the year ended 31 January 2018 is OMR2.4 million.

Viva Ltd

In September 2002, Mary Benton was paid OMR60,000 for services in respect of interior design work at Viva Ltd's head office. Mary Benton is the wife of the managing director and majority shareholder of Viva Ltd. The managing director refuses to disclose details of the transaction in the notes to the accounts because of its sensitive nature. The pre-tax profit of Viva Ltd for the year ended 31 January 2018 is OMR10.4 million.

REQUIRED

In respect of the situations outlined above, reach a conclusion on whether or not you would qualify each audit report. Give reasons for your conclusions and describe the potential effect, if any, on each audit report.