THE AUDITING AND ASSURANCE

Running head: AUDITING AND ASSURANCE
Auditing and Assurance
Name of the Student
Name of the University
Author’s Note

AUDITING AND ASSURANCE1
Table of Contents
Matter 1......................................................................................................................................2
Matter 2......................................................................................................................................2
Matter 3......................................................................................................................................3
Matter 4......................................................................................................................................4
References..................................................................................................................................6

AUDITING AND ASSURANCE2
Matter 1
A) The provided situation indicates towards the utilization of last-in first-out (LIFO)
method for the valuation of ending inventory; and there is a major difference between
first-in first-out (FIFO) and LIFO which is creating a major effect on Beast Ltd’s
ending inventory. This circumstance requires the auditor to provide the company with
Adverse Opinion under Unmodified opinion. Auditors issue the adverse opinion
where it is examined as well as concluded by the auditors that there are pervasive
material misstatement in the financial reports (Habib 2013). The auditors of Beast Ltd
id facing this similar kind of situation.
B) According to AASB 102 Inventories, it is illegal to use LIFO method in Australia and
this is because of the believe that the remaining inventory at the end of the period
does not reflect the present cost of inventory which leads to inaccurate valuation of
inventory (aasb.gov.au 2019). Therefore, Beast Ltd has breached the accounting
standard by using LIFO. In addition, there is a major difference between the inventory
values under FIFO and LIFO method and this difference creates a material influence
on the ending inventory balance of the firm. Since inventory is one of the most
significant accounting balances for the firm, this difference leads to key material
misstatements in the financial reports of the company and it is pervasive in nature.
Therefore, in the presence of these two reasons, adverse opinion needs to be provided
by the auditor.
Matter 2
A) It can be seen from the given scenario that the auditor have found the lack of
sufficient control over the collection of income in order to get the satisfaction that all
the received incomes are recorded. However, the auditors have also confirmed that all