The fiscal year of the Eddy Company ends on December 31. Your audit report, dated February 26, is to be delivered to the client on March 9. Listed below are events that occur or are discovered from the date of the balance sheet to June 30 of the following year:

1. Jan. 15 Inventory is sold at a price below December 31 net realizable value.

2. Jan. 20 A major customer becomes bankrupt from net losses.
3. Jan. 31 The board of directors authorizes the acquisition of a foreign company as a subsidiary.
4. Feb. 10 A fire destroys a major company warehouse.
5. Feb. 15 Labor negotiations fail and union employees go out on strike.
6. Feb. 25 A lawsuit is filed against the company for an accident that occurred on December 10.
7. Feb. 28 The board of directors authorize a 2 -for-1 stock split.
8. Mar. 7 A foreign government expropriates a major foreign subsidiary.
9 Mar. 31 A lawsuit is filed against the company charging two officers of the company with fraud in an October land deal.
Required:

a. Identify each event as a (1) subsequent event requiring adjustment, (2) subsequent event requiring disclosure, (3) subsequent event occurring after field work but before issuance of report, or (4) post audit discovery of facts existing at date of report.

b. Explain your audit responsibilities for each of the categories in (a).

c. Indicate how you would obtain knowledge of each of the nine items.

d. What additional responsibilities does an auditor have for item (a4) above if the client refuses to make required disclosures?