The following is the excerpt from the Star newspaper (Friday March 2, 2012): "PETALING JAYA: Poor record-keeping and the inability to verify sales transactions at Silver Bird Group Bhd are the reasons why Crowe Horwath, the independent auditors, has not been able to provide a basis for an audit opinion to the financial report for the financial year ended Oct 31, 2011 (FY11). "During the course of our audit for FY11, we expressed concerns to the audit committee and the board of directors over the validity and recording of certain transactions for which we were not able to obtain the sufficient and appropriate audit evidence and satisfactory explanations from management," Crowe Horwath said in the independent auditors' section of the financial report released on Wednesday. The auditors said they were unable to verify the veracity of payments made amounting to RM7.6mil for the refurbishment of an existing warehouse and factory, as well as not being able to obtain information to verify additions of plant and equipment amounting to RM4.9mil. Besides that, the auditors were not able to verify transactions undertaken with five customers for the sweetened creamer business with revenue and cost of sales amounting to RM31.9mil and RM31.3mil respectively, while they were not able to verify the veracity of sales transactions undertaken with six customers from the bakery and telecommunications businesses amounting to RM149mil, including RM83.9mil in gross telecommunications sales. The auditors said the transactions cast a significant doubt on the financial performance and position of the bread and confectionary maker. They added that the accounting and other records required by the Companies Act 1965 to be kept by the company and its subsidiaries "have not been properly kept in accordance with the provisions of the Act". "The audits of the subsidiaries have commenced but have not been completed as at the date of this report. "As a result of the delay in the completion of the audit of the subsidiaries, we have not been able to consider the financial statements and the audit reports of the subsidiaries," the auditors said. Silver Bird issued a number of announcements to Bursa Malaysia on Wednesday, including notification of the suspension of group managing director Datuk Jackson Tan, executive director Ching Siew Cheong and general manager for accounts and finance LaiPoh Mei from Feb 24 to facilitate an internal inquiry into allegations of, among others, irregularities in the accounts. The board also said in separate announcements that three of the subsidiaries were in default of payment to Bank Islam Malaysia Bhd, Malayan Banking Bhd and CIMB Bank Bhd amounting to RM5.37mil, and that the company had triggered the Practice Note 17 criteria after not being able to provide a solvency declaration. In response to an inquiry from StarBiz on the solvency declaration, the directors said the company was "working on getting the solvency statement out as soon as possible" Meanwhile, Lembaga Tabung Haji (LTH) and Berjaya Corp Bhd, major shareholders of the company, declined to comment while Koperasi Permodalan Felda did not reply to inquiries. "We'll leave it to the Silver Bird directors to issue any statements," an LTH official said. Silver Bird's share price fell 20 sen to 20.5 sen at close when trading resumed yesterday following a request by the company to suspend trading on Monday after its directors said the company was unable to comply with stock exchange requirements to issue the annual audited financial statements within four months from the end of the financial year." REQUIRED: (a) Based on the newspaper cutting above, identify the type of auditor opinion that is suitable for the above real case scenario. (2 Marks) (b) Identify and explain FOUR (4) deficiencies that were found by the auditor. (8 Marks) (c) Several conditions have to be met before a standard unqualified auditors' report can be issued. Explain THREE (3) of them. (6 Marks) (d) Explain the importance of auditor's report to the financial statement users. (2 Marks) (e) Explain why auditor's report is desirable to have a standard wording. (2 Marks)