Question

Please answer: What are the Material Level, the Additional Information, and the auditing report of 6 situations below 1) Auto Delivery Company has a fleet of several delivery trucks. In the past, Auto Delivery had followed the policy of purchasing all equipment. In the current year, they decided to lease the trucks. The method of accounting for the trucks is therefore changed to lease capitalization. This change in policy is fully disclosed in footnotes. Given condition is "No conditions are 2) You are auditing Deep Clean Services for the first time. Deep Clean has been in business for several years but over the last two years has struggled to stay afloat given the economic conditions. Based on your audit work, you have substantial doubt that Deep Clean will be in business by the end of its next fiscal year. Given condition is "Substantial Doubt about the going concern" 3) One of your audit clients has a material investment in a privately held biosciences company. Your audit firm engaged a business valuation specialist to assist in evaluating the client's estimation of the investment's fair value. You conclude that the valuation specialist's work provides sufficient appropriate audit evidence. Given condition is "No conditions are applicable" 4) Four weeks after the year-end date, a major customer of Prince Construction Co. declared bankruptcy. Because the customer had confirmed the balance due to Prince at the balance sheet date, management refuses to charge off the account or otherwise disclose the information. The receivable represents approximately 10% of accounts receivable and 20% of net earnings before taxes. Given condition is "Failure to follow GAAP" 5) During your audit of Raceway.com, Inc., you conclude that there is a possibility that inventory is materially overstated. The client refuses to allow you to expand the scope of your audit sufficiently to verify whether the balance is actually misstated. Given condition is "Scope of the audit has been restricted" 6) You complete the audit of Munich Department Store, and in your opinion, the financial statements are fairly presented. On the last day of the audit, you discover that one of your supervisors assigned to the audit has a material investment in Munich. Given condition is "Lack of independence" 1) What is the Material Level? Choose from the following a. High material b. High material or material C. Immaterial d. Material e. Not applicable 2) What is the Additional Information? Choose from the following a. Amount of loss b. Auditor's judgement C. Client imposed limit d. Size materiality 3) What is the auditing report? Choose from the following a. Qualified b. Unqualified c. Disclaimer d. Adverse

Answer 1

1 - immaterial , Auditor Judgement , Unqualified

2 - High Material , Auditor Judgement , Qualified

3 - Material , Size Materiality , Unqualified

4- Material , Client Imposed Limit , Qualified

5 - Material . Auditor Judgement , Qualified

6 - Immaterial , Auditor Judgement , Unqualified