Consider each of the following situations separately. Assume that all of theevents 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 September2010, the financial statements and audit report were mailed to the memberson 10 September 2010.

a) A draft investigative report commissioned by a government inquiry wasleaked to the media on 25 August 2010. The report has questioned thecontinued need for a segment of your clients business. Accordingly, thereis significant uncertainty regarding the future necessity for one of theservices offered by the company and its industry colleagues. There hasbeen significant media attention and speculation on this issue

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

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

d) On 20 August 2010, you discover that a debtor had gone bankrupt on 3rd August 2010. The last sale took place on 1 July 2010. The cause of thebankruptcy 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