You are the audit partner in each of the following independent and material scenarios.

1. Your audit client has made substantial losses for several years and is experiencing severe cash flow problems in the current year. After evaluating the client's situation, you conclude that the going concern assumption is no longer appropriate. The audit client has followed your recommendation to use liquidated values in preparing their financial report, and you are satisfied that the disclosures made are adequate. (2 marks)
2. You believe that the audit client's accounts receivable is materially overstated. You are unable to persuade management to change the financial report. (3 marks)