This relates to Subsequent Events for Audit

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Tanners Ltd is a wholesaler of packaging products and you are about to complete the financial report audit for the year end 30 June 2015. Before you finalise your audit opinion you are considering some significant events that have recently occurred in Tanners Ltd.

Denners Ltd and Minners Ltd

Denners Ltd, a customer of Tanners, is suing the company due to being sold faulty packaging.

Denners is a food manufacturer and has claimed that as a result of unhygienic packaging supplied by Tanners it had to re-supply some products to its customers, pay them compensation for their losses and dispose of other products that were now unfit for sale. Denners has made a claim against Tanners for $450 000, which Tanners is disputing because the fault lay with a new machine recently purchased from Minners Ltd. The board of Tanners have indicated they do not intend to provide for any amounts payable to Denners as these will be recouped from Minners.

Factory fire

There was a fire at one of Tanners factories in late July 2015. Some machinery, raw materials and finished products were damaged in the fire. The insurance company was informed and an investigation showed that the factory supervisor was at fault by not following safety procedures, as a result the insurance company have refused to accept the claim.

Jonners Ltd

In August 2015, Tanners was informed by one of its long-standing customers, Jonners Ltd, that it was having going concern problems and that paying the amount owed to Tanners was going to be difficult. No amount has been received from Jonners since June. The directors of Tanners believe that it is not necessary to adjust the receivable balance at 30 June 2015 as Jonners has always paid them in the past.

Question:

What are auditors responsibilities for the events? (There's 3 events or scenarios)

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