Ten (10) independent situations are included for which you must indicate the appropriate audit report type: a) Indicate the condition (whether change in accounting principle, non-compliance with GAAP, none, reports involving other auditors, or the scope of the audit has been restricted. b) Indicate the type of opinion in the audit report. (See listing below for your reference) c) In the comments column, describe the situation why you conclude that type of opinion, whether materiality, using an accounting method that is not GAAP, etc. d) The listings are for your reference. You can repeat if necessary or include an option that is not included.

Condition

No disclosure in financial statements

Client imposed scope limitation

Scope limitation, alternative procedure

Departure from GAAP

Change in estimate

Other auditors responsibility.

Loss contingency

Subsequent events

Accounting principles not consistently applied.

Correction of material misstatement in previously issued F/S.

Emphasis of a matter

Uncertainties-going concern

Type of Opinion

Unqualified - standard opinion

Unqualified with emphasis paragraph

Unqualified with additional information in opinion and responsibility

Unqualified with additional related information

Qualified

Adverse

Disclaimer

Events

Example:

A company has not followed generally accepted accounting principles in recording its investments.

Condition: Deviation from GAAP - The degree of materiality and whether it is pervasive to the financial statements or notes is not indicated.

Type of Opinion and Modification: Qualified or Adverse

Comments: 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.

1. The client Inventos, Inc. is issuing 2 years of comparative financial statements. The first year it was audited by another auditor who is asked to reissue his audit report. (Response to successor auditor's report).

Condition:

Type of opinion and modification:

Comments:

2. On January 2, 2023, Toasted Bread, Inc. received notice from its primary supplier that, effective immediately, all wholesale prices will increase by 10 percent. Based on the notice, Pan Tostado, Inc. revalued its December 31, 2022 inventory to reflect higher costs. Inventory constituted a significant proportion of total assets; However, the effect of revaluation was significant for current assets, but not for total assets or net income. The increase in valuation is appropriately indicated in the footnotes.

Condition:

Type of opinion and modification:

Comments:

3. A company valued its inventory at current replacement cost. Although the auditor believes that inventory costs approximate replacement costs, these costs do not approximate any GAAP inventory valuation method.

Condition:

Type of opinion and modification:

Comments:

4. A customer changed its depreciation method for production equipment from straight line to a units of production method based on hours of use. The auditor does not agree with the change.

Condition:

Type of opinion and modification:

Comments:

5. A client changed the method it uses to calculate post-employment benefits from one acceptable method to another. The effect of the change is irrelevant this year, but is expected to be in the future.

Condition:

Type of opinion and modification:

Comments:

6. An auditor reporting on the group financial statements decides not to assume responsibility for the work of a component auditor who audited a 70% owned subsidiary and issued an unqualified opinion. The total assets and income of the subsidiary are 5% and 8%, respectively, of the total assets and income of the audited entity.

Condition:

Type of opinion and modification:

Comments:

7. An auditor discovered that a client made illegal political bribes to a Puerto Rico gubernatorial candidate. The auditor was unable to determine that the amounts associated with the payments due to the client's inadequate record retention policies, although there is no likelihood that the financial statements are misstated, may be materially misstated. The client refuses to disclose the payments in a note to the financial statements.

Condition:

Type of opinion and modification:

Comments:

8. A client is issuing 2 years of comparative financial statements. The first year it was audited by another auditor who is not asked to reissue his audit report. (Response to successor auditor's report).

Condition:

Type of opinion and modification:

Comments:

9. Heavy 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 the products are shipped, which is typically 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.

Condition:

Type of opinion and modification:

Comments:

10. During the audit of Dream Team, a new client, in the long-term investment account the auditor finds that there is a large contingent liability that is important for the consolidated company. It is likely that this contingent liability will be resolved with a material loss in the future, but the amount is not estimable. Although no adjusting entry has been made, the client has provided a note to the financial statements that describes the matter in detail.

Condition:

Type of opinion and modification:

E Paragraph Normal No Spacing Heading 1 Styles Ten (10) independent situations are included for which you must indicate the appropriate audit report type: a) Indicate the condition (whether change in accounting principle, non-compliance with GAAP, none, reports involving other auditors, or the scope of the audit has been restricted. b) Indicate the type of opinion in the audit report. (See listing below for your reference) c) In the comments column, describle the situation why you conclude that type of opinion, whether materiality, using an accounting method that is not GAAP, etc. d) The listings are for your reference. You can repeat if necessary or include an option that is not included. Condition No disclosure in financial statements Client imposed scope limitation Scope limitation, alternative procedure Departure from GAAP Change in estimate Other auditors responsibility. Loss contingency Subsequent events Accounting principles not consistently applied. Correction of material misstatement in previously issued F/5. Emphasis of a matter Uncertainties-going concern Type of Opinion ility: Good to go EPIC 110