Reference no: EM133000301

Its now October 15, 2020 and COVID-19 has been in full swing for 7 months. The province is on the upswing of its second-wave and all retail and non-essential businesses have been shut for months. The BBK team has encountered significant difficulties with receiving outstanding accounts receivable (AR) confirmations due to all the shutdowns. Fran has tried emailing and calling businesses but has had no luck, business owners have many other concerns on their plates than responding to a measly AR confirmation. To date, they have only received 60% of their sample back and other procedures are not possible at this time given the lockdowns and restrictions in place. Joe is conflicted on what to do. Just because they haven't received the confirmations yet doesn't mean they won't pay off their outstanding balances. However, the challenge Joe is having is that AR is tied to the loan covenant for the bank and given the difficulty in receiving the AR confirmations back, they do not have enough comfort over Hillsburg's allowance for doubtful accounts balance.

Problem a) Why and what modification(s) to the opinion in the independent auditor's report would Joe have to make if they are unable to obtain a response to the outstanding account receivable confirmations? Explain your answer.

Problem b) Mitch asked you to please explain to him the difference between a qualified opinion, an adverse opinion, and a disclaimer of opinion, and the circumstances under which each are appropriate.

Problem c) How does an auditor's opinion differ between scope limitations caused by client restrictions and limitations resulting from conditions beyond the client's control? What is the effect of each on the auditor's work?