The following unrelated events occurred after the balance sheet date but before the auditor's report was prepared:

1. The granting of a retroactive pay increase.
2. Determination by the Canada Customs and Revenue Agency of additional income tax due for a prior year.
3. Charging the entity with restriction of trade by the federal government.
4. Declaration of a stock dividend.
5. Sale of a capital asset at a substantial profit.
Required

a. Explain how each of the above items might have come to the auditor's attention.

b. Discuss the auditor's responsibility to recognize each of these items in connection with his or her report.
(AICPA adapted)