Canada Accounting System: CAS 560

The end of the financial year is December 31, 2020. The audit report was signed on February 15, 2021. The financial statements were approved by the board of directors on February 15, 2021, and released to the public that same day, along with the auditor's report Required You have been given a number of independent situations below. Describe what action should be requested of the client by the auditor in each of the following situations. Potential options include: requesting that the client make a disclosure in the notes to the accounts requesting that the client make an adjustment (name the account) advising the client of a change in audit opinion (what sort of opinion should be given) doing nothing Explain your answer. Include an accounting and/or auditing standard and paragraph reference to support your answer (a) You discover on January 15, 2021, that Shoez, a major customer, has become insolvent and Cloud 9 will not be able to collect amounts owing to it. (b) You discover on February 10, 2021, that a customer is suing Cloud 9 after they slipped and fell inside a Cloud 9 retail outlet. The accident occurred in November 2017. (c) On January 31, 2021, the federal government released a draft paper proposing an increase in import duties on all goods from China of 150 percent starting in July 2021. This increase in duties would increase the price of Cloud 9 shoes significantly above the prices of competitors (d) At the official launch of the financial statements, you overhear the Financial Controller discussing a situation where an employee has been stealing cash from Cloud 9 (e) In March 2021, you read a newspaper article about Cloud 9 possibly purchasing the shoe company Groovy Shooz (a competitor) Auditor should: Explanation Reference () (b) (d) (e) Discussion points Consider what additional information might be required to be able to conclude on the appropriate treatment of these subsequent events. What would the most reliable source for this additional information be