Reference no: EM132564675

Question - While completing your audit work for the 30 June 2008 audit of Grape Ltd, you become aware of the following material matters:

(i) On 5 July, Red Pty Ltd, a major customer of Grape Ltd, was placed into liquidation. As Red Pty Ltd had confirmed the balance due to Grape Ltd as at balance date, management of Grape Ltd has refused to write off or provide for the Red Pty Ltd account in the 30 June 2008 financial report. However, they are prepared to disclose this information as a note to the financial report.

(ii) On 15 July, Grape Ltd entered into a new contract to supply wine to Wine Taster, a major new wine store that had set up operations in northern Queensland. The contract was similar in nature to other contracts previously negotiated with other wine stores. Management does not believe that any change to the financial report is required.

(iii) Grape Ltd has capitalised significant funds incurred in developing an improved new wine cap that allows the wine to continue to develop in the bottle. On 20 July, Grape Ltd applied for a patent for the cap, only to discover that a competitor had lodged a similar application on 15 June. The granting of Grape Ltd's patent application is now in serious doubt. Management do not believe any change to the financial report is required.

(iv) A note to the financial report of Grape Ltd refers to an agreement to sell its major subsidiary, Cleanskins Pty Ltd, to a rival wine company. This agreement was finalised the day before the financial report was to be signed and the sale is to take place a month after the audit report is to be signed. You have verified this transaction. However, when reviewing the 'Chairman's Review', which is to be included in the annual report that contains the audited financial report, you see that:

(a) Plans for expanding Cleanskins Pty Ltd's facilities are outlined;

(b) The additional revenue to be generated over the next ten years as a result of this expansion is tabulated; and

(c) There is no reference to the sale of Cleanskins Pty Ltd.

Management believe that it is too late to make any changes to the annual report, as it is ready to send to the printers, as soon as the audit report is signed.

(v) An auditor hires an actuary to assist in corroborating a client's complex superannuation calculations concerning accrued superannuation liabilities that account for 35 percent of the client's total liabilities. The actuary's findings are reasonably close to the client's calculations and support the financial report.

Required - For each independent situation, state the type of audit report that you should issue and give reasons for your answer.