Assume you are the partner in charge of the audit of Franklin Corporation's 2005 financial statements. The audit report has not yet been prepared. In each independent situation following, indicate the appropriate opinion you should issue and why you would issue that opinion.
- Franklin Corporation carries its property, plant, and equipment accounts at current market values. Current market values exceed historical cost by a highly material amount, and the effects are pervasive throughout the financial statements.
- Management of Franklin Corporation refuses to allow you to observe, or make, any counts of inventory. The recorded book value of inventory is highly material.
- You were unable to confirm accounts receivable with Franklin's customers. However, because of detailed sales and cash receipts records, you were able to perform reliable alternative audit procedures.