Wollongong Wear Ltd has placed deposits with an overseas supplier totalling $680000 for the manufacture of specially branded goods on 18 May 2021. On 5 June 2021 the supplier closed due to civil unrest in the country. Expert opinion obtained on 31 July 2021 stated that it was unlikely that the deposit would be recovered. Wollongong Wear Ltd purchases over $6 million worth of branded products from this supplier every year. The year-end for the Wollongong Wear Ltd audit is 30 June 2021, and the audit report is due to be signed on 14 August 2021.

Required

Is the event material? Explain. What is the appropriate treatment of this item in the financial report? What audit report would be appropriate if the directors of Wollongong Wear Ltd refuse to change the financial report?