QUESTION 12

Consider the following independent and material situation. In each case:

The balance date is 31^st October 2020

The fieldwork was completed on 5 December 2020

The financial report and audit report were signed on 12 December 2020

The financial report and audit report were mailed to the members on 20 December 2020

Required:

For each of the following independent and material situation, select the appropriate action from the list below, and justify your responses:

Adjust the 31^ST October 2020 financial report

Disclose the information in a note at the 31 October 2020 financial report

Request that the client recall the 31^ST October 2020 financial report for revision

No action is required.

Your client Kimberly Pty Ltd made an out-of-court settlement on 1 December 2020 of $300,000.00. The settlement is related to a litigation case dating back 4 yearsa provision of $150,000.00 was recorded in the 31 October 2020 financial report.