How should auditors deal with the issues in the audit report of JayZee Ltd.?

In the present case, auditors are unable to obtain sufficient and appropriate audit evidence with respect to inventory of the company, neither the physical verification has been done by the management nor adequate inventory records are being maintained by JayZee Ltd. The audit team is also unable to undertake the physical inventory count and as such the value of inventory could not be verified. Further, inventory constitutes 30% of the total assets of JayZee Ltd., which is significant. In the above case, the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive. Thus, auditors should give a Disclaimer of Opinion. As per Companies Auditors' Report Order 2020 (CARO 2020) dated 25th Feb 2020, the audit report shall include a statement on the following matter: Whether the physical verification of the inventory has been conducted at reasonable intervals by the management and whether, in the opinion of the auditor, the coverage and procedure of such verification by the management is appropriate. In view of the above the auditor should give a qualification in his report narrating the situation.