Question

You are the auditor of Auntie Rich Berhad in Malaysia and the following dates are relevant to the current audit engagement:

End of the reporting period 30 June 2021

Financial statement signed 15 August 2021

Auditors report signed 15 August 2021

Annual report mailed to members 22 August 2021

During your subsequent events review, you noted the following independent and material items.

(a) On 25 August 2021, the share price of the company dropped 50% because of an unfavourable news of the companys financial viability. The company expected it will drop another 20% in the next couple of months

(b) On 1 July 2021, there was an outbreak of bird flu in Malaysia and the chickens and ducks from the local farms were destroyed. Even though the company received some compensation, the company suffered a loss of RM1,000,000.

(c) New government policy has passed through on 1 August 2021 to increase corporate tax rate of 100% and this is basically to strengthen governments tax revenue. You discovered that the tax provision in the financial statement is provided based on the previous tax rate.

(d) A legal action has been taken against the company over a dispute of patent. A provision of contingent of RM1,000,000 has been provided in the financial statement for the year ended 30 June 2021. On 20 August 2021, the verdict of the judge concluded that the company must pay a compensation of RM1,000,000 to the plaintiff.

(e) A flash flood happened around Klang area on 10 August 2021. An estimation of 2,000 people was killed and all the inventories were damaged as the warehouse located in Klang was completely covered by water.

Required:

(i) What additional information would you obtain in relation to each of the events described above? You are required to provide at least ONE (1) audit procedure.

(10 marks)