Question One NKM (Formerly PKM) Private Ltd has been in business of Computer Software for 6 years, in the last couple of years, its growth rate has come down drastically the losses continue with net worth fully eroded. Its business is no longer exciting as the software does not cater to the sophisticated developments in mobile remote applications, which has become the norm in the last 2 years. The company is no longer considered to be next generation. The company had severe cash flows issue during the year and the next year is expected to be much more uncertain. Operation will be affected without significant fresh investment which are not clear at present. There is no proper cash flow projection for the next one year. There are pressing creditors which need to be settled as at year end it is not clear how they will be settled. The company's and its promoter's ability to reuse funds is quite low at present. The accounts are prepared as a going concern. As an auditor, how will you addresses this issue, and conclude on your audit report? (NB the opinion and basis of opinion is crucial) Question Two Maa Rose Ltd has not stated the inventories at the lower of cost and net realisable value but has stated them solely at cost, which constitutes, a departure from the IAS 2 Valuation of Inventories. The company has not worked out the NRV. The amount of inventories are material to the Financial Statement. The company has made gross losses during the year which indicate that the NRV could be lower but that does not give the quantification of the potential impact How would you conclude on this issue in your audit report as an auditor of Maa Rose Ltd? Question Three The auditor had sent request for confirmation of receivable, payable and bank balances However, No replies were received, confirming the balances. Your team draft a qualification as below Basis for Qualified Opinion: Confirmation of balances have not been received in respect of Receivables, Payables and Bank. The possible effect of such non confirmation have not been ascertained except for the possible impact of the matter referred to in the basis of Qualified Opinion paragraph Is this appropriate? If not what should be done