Q1 Four weeks after the year end date , a major customer of Prince Construction Ltd. declared bankrupt. Because the customer had confirmed the balance due to Prince at the balance sheet date, management refuses to write off the account or otherwise disclose the information. The receivable represents approximately 10 percent of accounts receivable and 20 percent of Net earnings before taxes.
Q2 You complete the audit of Johnson Department Store Ltd.,and in your opinion, the financial statements are fairly presented. On the last day of the examination, you discover that one of your supervisors assigned to the audit had a material investment in Johnson.
For each situation, state the type of auditor 's report that should be issued. If your decision depends on additional information, state the alternative reports you are considering and the additional information you need to make the decision