Required: For each of the following independent scenarios

a) Indicate the type of auditors report to be issued. Include the type of opinion and any other modifications.

b) Justify your conclusion by describing the conditions and nature of the issue that is affecting the type of the audit report to be issued

Scenario 2

Gourmet Chocolate Inc (GCI) is a private family owned specialty chocolate company that prepares seasonal treats and sells them through booths located in large shopping malls. There are 3 booths that are each operated by one of the family members. The company only accepts cash as a means of payment from customers. Internal controls among the 3 booths have not been adequately designed and due to the lack of control there is suspicion that some cash was misappropriated.

Indicate the type of audit report to be issues. Include the type of opinion and any other modifications.
Justify your conclusion by describing the conditions and nature of the issue that is affecting the type of the audit report to be issues

Scenario 3

Graham Construction Co Inc. (GCI) is a private company that expects significant material losses related to several long-term contracts in progress. GCI has not appropriately recorded the expected losses nor made any of the appropriate disclosures. The losses are due to significant increases in material costs for which GCI does not have control. The expected losses if recognized would have the effect of changing a positive net income before taxes to a material loss before taxes. If the losses were recognized, the current ratio would fall to 0.5 to 1. GCI is currently in negotiations with the union and has plans to lay off one third of its employees.

Indicate the type of audit report to be issues. Include the type of opinion and any other modifications.
Justify your conclusion by describing the conditions and nature of the issue that is affecting the type of the audit report to be issued