Question 2: Audit Opinions (20 marks) The external auditor is facing the following separate situations, the effects of all items below are material: 1. The Auditor has been carrying out his audit of an Investment company which has 70% of its assets in India. The new Chief Finance Officer has stopped him from going to India to verify the assets. (4 marks) 2. The Auditor was unable to obtain confirmations from three of the client's major suppliers that were included in the audit sample testing of supplier's confirmation. However, the auditor was able to satisfy himself about the balances of these creditor's balances using other audit procedures. (4 marks) 3. The client has been using LIFO when valuing inventory instead of FIFO or Weighted Average methods. This has resulted in a material misstatement in the value of inventory by 8 % .The client is unwilling to change the value of its inventory even after the Auditor has advised that the misstatement is material. The misstatement is limited to the effect on the Inventory and the current profit. Other assets appeared to be fairly stated. (4 marks) 4. The Auditor has discovered that the client's chief executive officer's salary and bonus has been incorrectly calculated with the effect of material overstatement of salaries and related provisions for bonus. The client disagreed with the auditor and did not made the necessary adjustments to the financial accounts. There is no other item expected to have any other material effect on the financial statements. (4 marks) 5. There were significant uncertainties regarding the financial statements due to lack of adequate accounting records. (4 marks) Required: For each of the separate situations above: (a) Identify the type of Audit Opinion required. (b) Briefly explain the basis of your answer.