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Morris Ltd Has Reported Losses Two Years in a Row

question 16

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Morris Ltd has reported losses two years in a row and has a debt to total assets ratio of 0.90. In addition, a $5 million debenture is maturing next year and the company has not set aside any funds to repay the debt. The parent entity of
Morris Ltd has decided to repay the debenture when it matures and provide sufficient funding to cover any additional
Losses that Morris Ltd might incur. Morris Ltd has not disclosed these arrangements in its financial report and the
Auditor is adamant that it should be brought to the shareholders' attention. What type of opinion should the auditor
Express on the financial report of Morris Ltd?


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