The fieldwork for the June 30, 2017, audit of Blacks Company Limited was finished August 19, 2017, and the completed financial statements, accompanied by the signed audit reports, were mailed September 6, 2017. In each of the highly material independent events (a. through h.), state the appropriate action (1 through 4) for the situation and justify your response using the principle outlined under IAS 10.

The alternative actions are as follows:

1. Adjust the June 30, 2017, financial statements.

2. Disclose the information in a footnote in the June 30, 2017, financial statements.

3. Request the client to recall the June 30, 2017, statements for revision.

4. No action is required. The events are as follows:

a. On August 6, 2017 the auditor discovered that a debtor of Blacks Company went bankrupt on July 30,2017 The cause of the bankruptcy was an unexpected loss of a major lawsuit on July 15, 2017 resulting from a product deficiency suit by a different customer.

b. On December 14, 2017 the auditor discovered that a debtor of Blacks Company Limited went bankrupt on July 15, 2017 due to declining financial health. The sale generating the receivable had taken place January 15, 2017