Graham Construction Co Inc. (GCI) is a private company that expects significant material losses related to several long-term contracts in progress. GCI has not appropriately recorded the expected losses nor made any of the appropriate disclosures. The losses are due to significant increases in material costs for which GCI does not have control. The expected losses if recognized would have the effect of changing a positive net income before taxes to a material loss before taxes. If the losses were recognized, the current ratio would fall to 0.5 to 1. GCI is currently in negotiations with the union and has plans to lay off one third of its employees.
Indicate the type of audit report to be issues. Include the type of opinion and any other modifications.
Justify your conclusion by describing the conditions and nature of the issue that is affecting the type of the audit report to be issued