1) For each of the following independent situations relating to the audit of internal controls, indicate the reason for and the type of audit report you would issue. That is, as well as giving the type of opinion you would issue, also discuss any other modifications to the report you would make, if any.

a) During the audit of Wood Pharmaceuticals, you are surprised to find several control deficiencies in the company's internal controls. You determine that there is a reasonable possibility that any one of them could result in a misstatement that is significant. Although the odds are extremely low that the deficiencies, singly or taken together, will results in a material misstatement of the company's financial statements, the large number of problems causes you concern. Management's written assessment concludes that the company's controls were effective as of the report date.

b) You agreed to perform an audit for Rodriguez & Co. after the client's year-end. Due to time constraints, your audit firm could not complete a full audit of internal controls. However, the evidence you did collect suggests that the company has exceptionally strong controls. You seriously doubt that a material weakness would have been found if time had permitted a more thorough audit. Management's written assessment concludes that the company's controls were effective as of the report date.

c) Reynolds' Distilleries identified what you agree is a material weakness in internal controls and made an adverse assessment in its report on controls. The company had not corrected the material weakness as of the end of the reporting period.