Your audit client, Roe Limited (RL), has found operations more challenging this financial year due to impacts resulting from Covid-19. RL are struggling to meet their cashflow and profitability projections required by the bank as part of their debt covenant. You are aware that the bank has indicated this situation may affect the financing arrangements currently in place which are critical to the success of RL's business. As the auditor you are concerned about this issue, although it has been appropriately disclosed in the financial statements, which you believe are fairly stated. What is the most appropriate audit opinion? O a. Unmodified Ob Qualified O c. Adverse O d. Disclaimer of opinion In relation to the audit report for Roe Limited example above, what is the most appropriate additional paragraph/section, if any? O a. None O b. Emphasis of Matter O c. Other Information O d. Material Uncertainty related to Going Concern You have completed the audit of Epsilon Group Ltd, noting that they had suffered a significant IT outage during the year which led to substantial costs in upgrading systems and a consequential decrease in profitability from the prior year. Key accounting records were also lost for the first three quarters of the financial year. You noted on review of the Director's report they discussed a significant increase in profitability from the prior year. This inconsistency was raised with management, but they declined to change the discussion. What is the most appropriate audit opinion? O a. Unmodified O b. Qualified O c. Adverse O d. Disclaimer of opinion In relation to the audit report for the Epsilon Group Ltd. example above, what is the most appropriate additional paragraph(s), if any? O a. None O b. Emphasis of Matter O c. Other Information O d. Material Uncertainty related to Going Concern You have completed the audit of Alpha Group Ltd. However you have a disagreement with management regarding the consolidation of a subsidiary, Beta Ltd. You believe that Beta should be consolidated but management has refused. Relative to Alpha Group, Beta Ltd. is a small company, which holds only investment assets and has no liabilities. The investment assets are material to the group. What is the most appropriate audit opinion? O a. Unmodified O b. Qualified O c. Adverse O d. Disclaimer of opinion In relation to the audit report for the Alpha Group Ltd. example above, what is the most appropriate additional paragraph(s), if any? O a. None O b. Emphasis of Matter O c. Other Information O d. Material Uncertainty related to Going Concern
