Question 5 (6 + 4 = 10 marks) a. You are the auditor partner on the engagement. You consider the following independent and material situation: i. Pine Farms Ltd is an online retailer of body lotions. The company records revenue at the time customer orders are placed on the website, rather than when the goods are shipped, which is usually two days after the odder is placed. The auditor determines that the amount of orders placed but not shipped as of the financial report date is not material. ii. The controller of City Hotels Ltd will not allow you to confirm the receivable balance from two of its major clients. The amount of the receivable is material in relation to Citys financial statements. You are unable to satisfy yourself as to the receivable balance by alternative procedures. iii. Charles Ltd has prepared financial statements but has decided to exclude the statement of cash flows. Management of Charles Ltd explains to you that the users of their financial statements find this statement confusing and prefer not to have it included. Required: Advise what type of the auditor opinion that you would issue in each of the above independent situation from the following choices. Explain your answer. (2 + 2 + 2 = 6 marks) (1) Unmodified (2) Unmodified- emphasis of matter (3) Qualified (4) Disclaimer (5) Adverse b. State the two primary types of subsequent events that are required consideration by management and evaluation by the auditor. G ive two examples of each type of subsequent event. (4 marks)

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