Q2

Part B (4 Marks) Your firm is the external auditor of Hard Rock Ltd, a large and diversified entity, to which the following timelines apply. - A balance date of 30 June 2021: - Directors declaration and audit report to be signed 28 July 2021 - Financial report and audit report to be mailed to shareholders 4 August 2021. Required: For each of the following independent and material situations, select the appropriate action from the list below, and justify your responses: A. Adjust the 30 June 2021 financial report B. Disclose the information in a note at the 30 June 2021 financial report C. Request that the client recall the 30 June 2021 financial report for revision D. No action is required. Situation 1 Hard Rock Ltd sells high-value drainage components. Due to these items' size and quantity. they are stored in a large outdoor space on the outskirts of Sydney. Shortly after the year-end on 23rd July 2021, a significant amount of this stock was stolen. The security at this site was inadequate, and no record of the theft was available. Situation 2 One of the major debtors, Loser Ltd, which existed on 30 June 2021, was unexpectedly declared bankrupt on 20 July 2021