Question 3 A. In relation to an independent auditor's report, explain 'modified'.

B. State TWO (2) main reasons for an auditor modifying an audit opinion.

C. For each situation below, examine the implications of an independent auditor's report: i. Sandy Beach Hotel is being sued by a competitor for the theft of intellectual property. The amount of the claim is material and the case could go either way. The claim is not mentioned anywhere in the financial statements. ii. HanLue Company is a cash retailer and there is no test to confirm the accuracy of cash sales. iii. Calvin Company has neglected to include a statement of profit and loss in its financial statements. D. What is the significance of the 'key audit matters' section of a typical audit report?