Tickitt & Run are conducting the final audit of Woodhood PLC who are importers and dealers in timber and manufacturers of packing materials. The accounts show results which are comparable to those of the previous year. The auditors are puzzled by this as they know that the company is having difficulties and that creditors are pressing and the bank is making difficulties over the overdraft. The auditors are suspicious of the accounts and resolve to be especially vigilant in the audit of post Statement of Financial Position events. The company’s year end is 31 March 2X11 and they are doing the audit in mid June 2X11. Two specific items have come to their attention:

(a) In the sales office the auditors found some promotional literature offering special very low prices for obsolete stock in July.

(b) In conversation with the purchasing manager the auditors discovered that the company had signed a barter deal with an exporter in China for the exchange of specialized wood products for some woodworking machinery of Westwood that is surplus to requirements. The contract was signed in February 2X11 for completion in the winter of 2X1 WALZ.

Questions:-

1. List the procedures that the auditors should adopt re post Statement of Financial Position events.
2.  What particular further facts should they elicit re (a) and (b)?
3. What might be the significance of these items for the accounts?