(b) You are the audit manager of Jinack Co, a private limited liability company. You are currently reviewing two matters that have been left for your attention on the audit working paper file for the year ended 30 September 2005: (i) Jinack holds an extensive range of inventory and keeps perpetual inventory records. There was no full physical inventory count at 30 September 2005 as a system of continuous stock checking is operated by warehouse personnel under the supervision of an internal audit department. A major systems failure in October 2005 caused the perpetual inventory records to be corrupted before the year-end inventory position was determined. As data recovery procedures were found to be inadequate, Jinack is reconstructing the year-end quantities through a physical count and ‘rollback’. The reconstruction exercise is expected to be completed in January 2006. (6 marks) Required: Identify and comment on the implications of the above matters for the auditor’s report on the financial statements of Jinack Co for the year ended 30 September 2005 and, where appropriate, the year ending 30 September 2006. NOTE: The mark allocation is shown against each of the matters.