Consider each of the following two (2) independent and material situations. In each case:

• the balance date is 30 June 2019.
• the fieldwork was completed on 5 August 2019.
• the financial report and audit report were signed on 12 August 2019.
• the financial report and audit report were released to the members on 20 August 2019.

Required

For each of the situations,

1. state the appropriate action (A) to (D) that the auditor would require in order to issue an unqualified opinion. The alternative actions are as follows:
2. Client to adjust the 30 June 2019 financial report.
3. Client to disclose the information in the notes to the 30 June 2019 financial report.
4. Client to recall the 30 June 2019 financial report for revision.
5. No action is required.
6. Justify your response.

Event 1

Your audit client Tucker Ltd (Tucker) is a food producer. On 2 July 2019, a blackout was caused by a tradesperson working in the local area cutting a power cable. This turned off all electricity in the local area, including the fridge and freezer facilities at Tucker's warehouse. The energy providers were unable to restore power for 48 hours. All the frozen and fresh food on hand at the warehouse was ruined. Tracy Smith, Chief Financial Officer, estimates that total inventory lost was worth approximately $1 million. Tracy estimates that about 80% of the lost inventory was on hand at year end. This loss is not covered by Tucker's insurance policy.

event 2

On 14 August 2019, you discover that a debtor of your client, Galaxy Ltd, was placed in provisional liquidation on 8 August. The debtor owed $600,000 as at 30 June; a specific provision of $300,000 of this amount was made at this date. On very preliminary information, the likely payout to unsecured creditors is zero