Consider each of the following independent and material situations. In each case:

the balance date is 30 June 2020.

the fieldwork was completed on 27 August 2020.

the financial report and audit report were signed on 29 August 2020.

the financial report and audit report were mailed to the members on 3 September 2020.

(i)Your client, Central Mining, owns a mineral exploration licence in Central Australia. At 30 June 2020 this licence was valued by an independent expert at $50,000,000. This valuation is reflected in the financial report. On 8 September 2020 Central Mining received notice that a claim was being lodged under the Native Titles Act for land which included that subject to the exploration licence. If the claim is successful the exploration licence will be worthless.

(ii)Your client, Bird Pty Limited, derives approximately 25% of revenues from selling aviary supplies to city-based bird breeders.

A draft copy of a government report, leaked to the press and reported in the media on 5th September, recommends that strict limits be placed on the number of birds that are allowed to be kept in suburban areas. Bird Pty Limited estimates that if the recommendations are enacted, about 80% of its customers will have to cut their flocks by 60% or more. This would affect not only future sales but also their ability to pay existing debts. No further information, other than the draft report, is available as at 8th September.

(iii)Your client, Gem Pty Limited, made an out of court settlement on 1 August 2020 of $300,000. The settlement related to a litigation case dating back 4 years. A provision of $150,000 was recorded in the 30 June 2020 financial report.

(iv)On 14 September 20X7, you discover that a debtor of your client, Galaxy Ltd, was placed in provisional liquidation on 8 September. The debtor owed $600,000 as at 30 June 2020; at this date the amount had been considered collectable by the company.

(v)A flood occurred in the warehouse of your client SuperSpring Ltd on 21 September 2020. Inventory valued at $2m was destroyed. The directors believe only half of this value will be recovered from the insurers.