The financial year of Sullivan & Evans Limited ended on 30 June...
The financial year of Sullivan & Evans Limited ended on 30 June 2020. Your auditor's report was signed on 20 August and the financial statements were issued on 5 September. Listed below are events that occurred or were discovered after the end of the financial year. Assume that each has a material effect on the financial statements.
22 July 2020 — Sullivan & Evans Limited received a notice that one of its customers was taking legal action in relation to a disputed warranty claim. The customer purchased the goods on 31 May 2020 and first informed Sullivan and Evans of problems with the goods on 28 June 2020.
25 August 2020 — There was a fire at Sullivan & Evans Limited warehouse which destroyed 30% of the inventory.
REQUIRED
In the box below, provide your answers to the following questions:
(a) Identify the audit procedures normally associated with subsequent events (5 marks)
(b) Indicate your responsibilities for each of the above events. (4 marks each; total 8 marks)
(c) Indicate the type of disclosure (if any) you would recommend in relation to each of the above events. (6 marks each; total 12 marks)