You are the auditor for Sugarcane Ltd (Sugarcane), a sugar production and distribution company, for the year ended June 30^th,2020.Your auditor's report was signed on September 3^rd, 2020.The financial report was approved on the same day by the directors of Sugarcane.The financial report was issued to shareholders on October 1^st, 2020.The following material events occurred or became known to you from June 30^th, 2020 onwards.Assume that each event is material.

Required:

(a)For each of the following independent and material situations (see the information in the table below), select the appropriate action from the list below (A, B, C, or D).

Situation 1: On July 22^nd, 2020 a massive dust storm ruined the entire sugarcane harvest.The loss was only partly insured.

Situation 2: On October 3^rd, 2020 management informed you that a lawsuit that commenced on August 1^st, 2019 and which was noted as a contingency in the June 30^th, 2020 financial report was ruled by court on August 19^th, 2020.The damages are five times higher than estimated on June 30^th, 2020.

Situation 3: On October 3^rd, 2020 management informed you that a lawsuit that commenced on August 1^st, 2019 and which was noted as a contingency in the June 30^th, 2020 financial report was ruled by court on September 8^th, 2020. The damages are five times higher than estimated on June 30^th, 2020.

A. Adjust the 30 June 2012 financial report.

B. Disclose the information in a note to the 30 June 2012 financial report.

C. Request that the client recall the 30 June 2012 financial report for revision.

D. No action is required.

(b)Describe the appropriate treatment required in the financial report giving reasons for your decision.