Audit Reports for Each of the Following Independent Situations,determine the Type of Type

question 95

Essay

Audit reports
For each of the following independent situations,determine the type of opinion that will most likely be issued by the firm auditing the financial statements.
1. The client will not allow the auchtor to view the minute for the entire year uncler aucht and beyond.
2.. The auditor finds that the firm is not independent of the client on the last day of fieldwork.
3. The client declines to include a statement of cash flow in the financial statements.
4. The client fails to record an immaterial amount of insurance paid in advance as an asset.
5. The client doesnot record impairment of goodwill and will not depreciate property and equipment. Both are considered ver material.
6. There is substantial doubt about the client's ability to continue as a going concern

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Definitions:

WACC

Weighted Average Cost of Capital, a measure of a company's cost of capital where each category is proportionally weighted.

MM Proposition

Refers to the Modigliani-Miller theorem, which posits that under certain market conditions the value of a company is unaffected by how it is financed, whether through debt or equity.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, representing how a firm finances its overall operations and growth.

Miller's Theory

Miller's Theory, part of the Modigliani-Miller theorem, posits that in perfect markets, the value of a company is unaffected by how it is financed, regardless of whether it's through debt or equity.