The following areindependentsituations relating to the year ended 30 June 20Y6.Assume all entities are reporting entities and that all situations are material.

I.You are the auditor of Fine Timber Limited (Fine Timber) a major furniture manufacturer in Malaysia. Fine Timber intends to upgrade its manufacturing processes and plans to finance the upgrade from the sale proceeds of a property which is superfluous to its needs.The property was subdivided, made ready for sale and placed on the market in May 20Y6.On 17 July 20Y6 the state government approved plans for the construction of a major sporting complex.Construction of the sporting facility will result in the appropriation of a portion of the property that Fine Timber intended to sell.It is envisioned that the construction of the sporting complex will start in the middle of 20Y4 and no estimate of the compensation payable to Fine Timber and others affected will be available until early 20Y7.

II.Office4Us Limited is major public company involved in the stationery and office supplies market.Before signing the audit report of the company you requested a letter of comfort from the company's bankers that the bank would continue to support Office4Us Ltd. financially over the next twelve months.The bank agreed that it would continue to provide finance to the company.It was your view that without the financial support of the bank, Office4Us Ltd. would have severe cash flow problems and its financial report would need to be qualified on a going concern assumption.On 10 August 20Y6 the company's bankers wrote to you to advise that in July 20Y6 the company breached its loan covenant with the bank.As a result the bank requested that Office4Us Ltd. immediately repay the bank loan and it also informed Office4Us Ltd. that it was not prepared to provide it with additional loan funds.You have not yet signed the company's audit report for the year ended 30 June 20Y6.

REQUIRED:

1.For eachsituation above, describe the additional audit procedures you would perform prior to issuing your audit report.

(8 Marks)

2.Describe the audit opinion you intend to issuefor eachof the above entities for the year ended 30 June 20Y6.