) Type of Opinion:
The audit opinion will be a qualified opinion. The issue at stake is material but not pervasive. Management is in disagreement with the auditor regarding the adoption of the lower of cost and net realizable value in the valuation of inventories.
(2 marks)

ii) Audit Report Paragraphs:
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF YAWA COMPANY LIMITED FOR THE YEAR ENDED 31ST DECEMBER 2017

Qualified Opinion:
We have audited the financial statements of Yawa Company Limited, which comprise the statement of financial position as at 31st December 2017, and the statement of comprehensive income, statement of changes in equity, and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, except for the matter stated in the basis of qualified opinion, the accompanying financial statements give a true and fair view of the financial position of Yawa Company Limited as at 31st December 2017, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and in the manner required by the Companies Act 1963, Act 179.
(4 marks)

Management Responsibility:
The Board of Directors is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act 1963, Act 179, and for such internal control the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

In preparing the financial statements, the Board of Directors is responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the company or cease operations or has no realistic alternative but to do so. The Board of Directors is also responsible for overseeing the company’s financial reporting process.
(2 marks)

Auditor’s Responsibility:
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatements, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercised professional judgment and maintained professional skepticism throughout the audit.
(2 marks)

(Total: 10 marks)