QUESTION TWO (20 MARKS) You are an employee of Bawumia, Jennifer & Co, a firm of Chartered Accountants providing audit and assurance services. Your firm has a number of clients across the country. During the audit of some of the clients, for the year ended 31 December, 2019, your interim audit revealed the following issues: (a) Animo Company operates a perpetual inventory system. No year-end count is performed. You have reviewed the level of adjustments made each month after each perpetual count and concluded that due to the significance of the adjustments, the inventory system is not reliable. You have requested that a full year-end count is performed but management have refused saying it would be too disruptive. The inventory balance is GHC4 million. Sales revenue is GHC50 million and profit for the year is GHC15 million. (b) Awurade Hwe Ltd has not made allowance for an irrecoverable debt of GHC50,000 in respect of a customer declared bankrupt just after the year-end. Profit for the year is GHC500,000. (c) Nkran Ltd 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. (d) Good Old Days Ltd is a cash retailer. There is no system to confirm the accuracy of cash sales. (e) Kumasi Suame Company Ltd is involved in a major court case that would bankrupt the company if lost. The directors assess and disclose the case as a contingent liability in the accounts. The auditors agree with the treatment and disclosure. Required: For each of the above situations describe the implications for the independent auditor's report