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You are auditing Diverse Carbon, a manufacturer of nerve gas for the military, for the year ended September 30. On September 1, one of its
You are auditing Diverse Carbon, a manufacturer of nerve gas for the military, for the year ended September 30. On September 1, one of its manufacturing plants caught fire, releasing nerve gas into the surrounding area. Two thousand people were killed and numerous others paralyzed. The company's legal counsel indicated that the company is liable and that the amount of the liability can be reasonably estimated.
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1) Is a disclosure needed?
2) What kind of opinion should the auditor issue if a disclosure is needed and not made?
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