Question 2 CIRCUMSTANCE Inadequate inventory records MATERIAL/ PERVASIVE Material and pervasive Completion of contract method inappropriately Material applied Inventory stated at cost less anticipated selling Material costs for a highly profitable product. and pervasive Going concern depends on negotiations to be Material finalized after AFS are issued, disclosure has been made. Unable to substantiate cash transactions. Failure to comply with the 4th schedule. Goodwill shown in balance sheet no longer justified. Pending litigation not disclosed. (10 marks) OPINION Disclaimer Adverse Except for Except for YOUR ARE REQUIRED TO: State in your answer book, per circumstance whether a. the matter is material and/or pervasive, as well as b. what type of opinion would be issued. Consider each circumstance separately and give reasons.