Question 2. Auditors Report (30 marks) Assume you are an auditor and you are facing the following separate circumstances, the effects of all the items below are material: 1. Management have excluded from the financial report the necessary disclosures in relation to a contingent liability (10marks) 2. A manufacturing company is currently negotiating with the bank an extension of a loan facility that is due for repayment shortly after the AGM; without this refinancing the business will not be able to continue operations. (10 marks) T3 2020 Online Final Examination: ACC707 PG Auditing and Assurance Page 4 of 5 3. A wholesaler has a policy of including all its buildings in the balance sheet at cost less depreciation. You establish that one of the warehouses included in the balance sheet at a value of $20m has an actual market value of $23m. (10 marks) Required Indicate the effect of the above circumstances on your auditors report if management were to refuse to make any changes you feel necessary in order that the financial report gives a true and fair view. Answer each case independently