Question 4

The following timeline applies to your audit client Crunchy Nuts Pty Ltd. (CN), which manufactures and exports breakfast cereals to overseas markets.

• A balance date of 30 June 2022:
• Directors' declaration and audit report to be signed on 28th July 2022
• Financial and audit reports? be mailed to shareholders on 4th August 2022.

Required:

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

A. Adjust the 30th of June 2022 financial report.

B. Disclose the information in a note on the 30th of June 2022 financial report.

C Request that the client recall the 30th of June 2022 financial report for revision.

D. No action is required.

Your client Crunchy Nut's Pty Ltd, made an out of court settlement on 16^th July 2022 of $3, 000,000.00. The settlement related to a litigation case dating back 4 years. A provision of $2,150,000.00 was recorded on the 30^th of June 2022 financial report.

Action (1 mark) Reason (1 mark)

On 10^th August 2022, Crunchy Nut Pty Ltd's board plans to appoint a new financial controller

Action (1 mark) Reason (1 mark)