You are a senior auditor at CPA LLP. This year, your audit client is Burnaby Wholesalers Ltd, a Canadian public listed firm that distributes building materials, hardware, gardening, and related products to retail stores that service the "do-it-yourself" home improvement market. The audit engagement team includes you, one engagement partner, three junior auditors, and two senior auditors. The fiscal year-end under audit is December 31, 2021. Prior to the current fiscal year, Burnaby Wholesalers was audited by another public accounting firm, but the client changed auditors in early June 2021 because management was dissatisfied with the predecessor audit firm's high audit fee and lack of timely service. During the audit of Burnaby Wholesalers, you encounter the following scenarios. Please respond to each scenario and include your discussions in one PDF document.

6. After conducting the audit procedures, you and other team members summarize all the misstatements discovered and possible adjustments to the financial statements as follows: Identified $100,000 Likely $800,000 $20,000 $200,000 Overstatement of finished goods inventories (valuation errors) Overstatement of accounts receivable (confirmation exceptions) Estimated understatement of allowance for doubtful accounts Total $500,000 $500,00 $620,000 $1,500,000 In addition, you identified a $20,000 understatement of finished goods on December 31, 2020 and estimated that finished goods were likely understated by a total of $200,000 at that date. The 3 materiality is determined to be $1,600,000. Please analyze the findings and assess the impact on audit opinion (8 marks). 6. After conducting the audit procedures, you and other team members summarize all the misstatements discovered and possible adjustments to the financial statements as follows: Identified $100,000 Likely $800,000 $20,000 $200,000 Overstatement of finished goods inventories (valuation errors) Overstatement of accounts receivable (confirmation exceptions) Estimated understatement of allowance for doubtful accounts Total $500,000 $500,00 $620,000 $1,500,000 In addition, you identified a $20,000 understatement of finished goods on December 31, 2020 and estimated that finished goods were likely understated by a total of $200,000 at that date. The 3 materiality is determined to be $1,600,000. Please analyze the findings and assess the impact on audit opinion (8 marks)