Auditing theory and practice

Question 1 You are the audit senior on the audit of Bright Glow Ltd (Bright Glow), an Australian listed company that specialises in the design and manufacture of skin-care products for distribution throughout Australia. It is now 4 August 2015 and you are finalising your audit of Bright Glow's financial report for the year ended 30 June 2015. The auditor's report and directors' declaration are due to be signed on 15 August 2015. As part of your completion procedures, you have noted the following material issues. On 27 June 2015, there was a fire in one of Bright Glow's Sydney warehouses that was used to stock its cosmetic products for the Sydney market. At the time of the fire, the products that were destroyed included all of the forward sales orders for the month of July for Bright Glow's Sydney customers. Management did not tell you about the fire when it occurred, but have included a note in the financial report about it. They noted significant damage to the building and to the stock on hand at the time of the fire. Despite this, no adjustment has been made to Bright Glow's 2015 financial report. REQUIRED appropriate. For the above events, identify and justify what action, if any, is most a) Assuming the same facts as for (a), except that the fire occurred on 18 July 2015, identify and justify what action, if any, is most appropriate. b) Assuming the same facts as for (a), except that the fire occurred on 17 August 2015, identify and justify what action, if any, is most appropriate