Consider each of the following situations separately. Assume that all of the events are highly material. In all situations:

the balance date for the companies is 30 June 2010

the field work for the companies was completed 20 August 2010

the financial statements and audit report were signed on 3 September 2010

the financial statements and audit report were mailed to the members on 10 September 2010.

a) A draft investigative report commissioned by a government inquiry was leaked to the media on 25 August 2010. The report has questioned the continued need for a segment of your clients business. Accordingly, there is significant uncertainty regarding the future necessity for one of the services offered by the company and its industry colleagues. There has been significant media attention and speculation on this issue.

b) On 20 October 2010, you discover that a debtor of NACD Limited at 30 June 2010 had gone bankrupt on 1 October 2010. The debt had appeared collectible at 30 June 2010 and 3 September 2010.

c) On 7 September 2010, you discover an uninsured legal action against the client that had originated in January 2007.

d) On 20 August 2010, you discover that a debtor had gone bankrupt on 3 August 2010. The last sale took place on 1 July 2010. The cause of the bankruptcy was a major uninsured fire at one of the debtors premises.

Required: For each of the situations above:

1. State which of the following actions should the auditor determine to be undertaken: a. Adjust the 30 June 2010 financial statements b. Disclose the information in the notes to the 30 June 2010 financial statements c. Request the client to recall the 30 June 2010 financial statements for revision d. No action is required

2. Give reasons as to why the particular action should be taken and any further action that the auditor should undertake prior to forming the audit opinion.