Question Three a) Explain clearly the sections of the auditors opinion. (6 marks) b) An independent auditor does not usually prepare financial statements but instead samples and investigates data to render a professional opinion on whether the financial statements are fairly presented. List and discuss the implications of the auditors responsibility to users/analysts that rely og financial statements. (8 marks) here, and efect Min pour une meblendet c) Erickson Electricals is engaged in the design, manufacture and sale of a broad range of electrical and electronic products and systems. The following data shows the company's net income and income before exceptional items (as per IAS 1) for the past 20 years (in Shs. m) Page 2 of 4 Year Year Net Income 1 11 2 12 3 13 14 Income before Net Income Exceptional items 201 201 237.7 237.7 273.3 273.3 300.1 300.1 302.9 302.9 349.2 349.2 401.1 401.1 408.9 408.9 467.2 4672 528.8 528.8 Income before exceptional items 588.8 613.2 631.9 662.9 708,1 9044 929.0 1018.5 1121.9 1228.6 5 588.8 613.2 631.9 662.9 708.1 788.5 907.7 1018.5 1121.9 1228.6 15 16 6 7 8 17 18 19 9 19 20 Erickson has achieved a consistent earnings growth over the past 40 years, Required: 1) From your observation (evaluation) of the figures given identity the strategy that the company has applied over the years to maintain its record of steady growth earnings (2 marks ii) Describe the extent to which the reported earnings reflect business activities excellent management and/or earnings management (2 marks) iii) Describe how the earnings is peuven good bead yours (2 marks) iv) Identify and explain) the years in which Erickson is likely to have built hidden reserves and the years in which it probably drew upon those hidden reserves. (5 marks) [Total: 25 marks) IU