Tab C lists ten (10) stand-alone scenarios for which you will need to provide the appropriate audit report type: a) State the condition (whether change in accounting principle, non-GAAP non-compliance, none, reporting involving other auditors, or the scope of b) Indicate the type of opinion in the audit report. (See listing below for your reference) c) In the comments column, describe the situation in which you conclude in that type of opinion, whether materiality, use of non-GAAP accounting m d) Listings are for your reference. You can repeat if necessary or include any options that are not included. \begin{tabular}{|c|c|c|c|c|} \hline 3 & Event & Condition & \begin{tabular}{c} Type of Opinion \\ and Modification \end{tabular} & Feedback \\ \hline 4 & \begin{tabular}{l} Example: A company has not followed generally accepted accounting principles \\ in recording its investments. \end{tabular} & GAAP Deviation & \begin{tabular}{l} Qualified or \\ Adverse \end{tabular} & \begin{tabular}{l} It depends on the degree of \\ materiality. The degree of \\ materiality or whether it is pervasive \\ to the financial statements or notes \\ is not indicated. \end{tabular} \\ \hline 5 & \begin{tabular}{l} During the audit, it was discovered that a client made illegal political bribes to a \\ candidate for governor of Puerto Rico. The auditor was unable to determine the \\ amounts associated with the payments due to the client's inadequate record \\ retention policies. The client has added a note to the financial statements to \\ describe the illegal payments and has stated that the amounts of the payments \\ are not determinable. \end{tabular} & & & \\ \hline 6 & \begin{tabular}{l} During the audit of the financial statements of a manufacturing company with \\ branches in many distant cities, the auditor was unable to account for the \\ substantial undeposited cash receipts at the close of business on the last day of \\ the fiscal year at all branches. As an alternative to this audit procedure used to \\ verify the exact cut-off of cash receipts, the CPA noted that deposits in transit, as \\ indicated in the year-end bank reconciliation, appeared as credits on the bank \\ statement on the first business day of the new year. You are satisfied with the \\ limit on cash deposits by using the alternative procedure. \end{tabular} & & & \\ \hline 7 & \begin{tabular}{l} Hot and Sweet Lotions, Inc., is an online retailer of body lotions and other bath \\ and body items. The company records revenue at the time customer orders are \\ placed on the website, rather than when products are shipped, which is usually \\ two days after the order is placed. The auditor determined that the number of \\ orders placed but not shipped as of the balance sheet date is not significant. \end{tabular} & & & \\ \hline & \begin{tabular}{l} During the course of its audit of a corporation's financial statements for the \\ purpose of expressing an opinion on the statements, an auditor is denied \\ permission to inspect the minutes of board meetings that document significant \\ board decisions. Instead, the secretary of the corporation offers to deliver to \\ the CPA a certified copy of all resolutions and actions related to accounting \\ matters. \end{tabular} & & & \\ \hline \end{tabular} One company valued its inventory at the current replacement cost. While the auditor believes that inventory costs approximate replacement costs, these costs 9 do not approximate any GAAP inventory valuation method. 10 A client changed the depreciable life of certain assets from 10 to 12 years. The auditor disagrees with the change. Limited to fixed assets and accumulated depreciation, the misstatements involved are not considered generalized. An auditor reporting on the group's financial statements decides to assume responsibility for the work of a component auditor who audited a 70% owned subsidiary and issued an unchanged opinion. The total assets and revenues of the subsidiary are 5% and 8%, respectively, of the total assets and revenues of 11 the audited entity. When auditing a new client's long-term investment account, the auditor finds that there is a large contingent liability that is important to the consolidated company. This contingent liability is likely to be resolved with a material loss in the future, and this amount is reasonably estimable at $2,000,000. Although no recosting entry has been made, the client has provided a note to the financial statements describing the matter in detail and including the estimate of 12 $2,000,000 in that note. CPA firm Los Duros has completed its audit of a bus company's financial statements for the year ended December 31, 2022. Prior to 2022, the company depreciated its buses over a 10-year period. During 2022, the company determined that a more realistic estimated lifespan for its buses was 12 years and calculated 2022 depreciation based on the revised estimate. The CPA has become convinced that the life of 12 years is reasonable. The company has adequately disclosed the change in the estimated lifespan of its buses and the 13 effect of the change on 2022 revenue in a note to the financial statements. A client is issuing 2 years of comparative financial statements. The first year you were audited by another auditor who is not required to reissue your audit report. (Response to the report of the successor auditor). 14