Standards:

ISA/ASA 560

ISA/ASA 700/705/706

ISA/ASA 500

ISA/ASA 570

Consider each of the following independent and material situations:

• The financial report date is 31 December 2014.
• The field work was completed on 12 February 2015.
• The directors declaration and the Audit report was signed on 19 February 2015.
• The completed financial report accompanied by the signed Audit Report were mailed to the shareholders on 18 March 2015.

You are an auditor of XY Limited (XY), a manufacturing client. XY has plans to upgrade its manufacturing process and plans to finance this by a sale of property which is superfluous to its needs, situated next to its head office. The property has been subdivided for the purposes of the sale and placed on the market in December 2014. On 25 January 2015, the state government approved a plan for the construction of an express freeway. The plan will result in the appropriation of a portion of the property owned by XY and subdivided for the purpose of sale. Construction of the freeway will begin in late 2015. No estimate of the compensation payment is available.

1. If no action is taken by management, determine the most appropriate audit report to be issued.