You are the supervisor on the audit of New Generation Club, a large suburban club in New South Wales. As well as the usual club facilities such as poker machines, bars and a bistro, the club also operates a large gymnasium, an indoor heated pool and a restaurant. The following dates are relevant to the current audit engagement:

End of the reporting period 30 June 2020

Financial statements signed 15 August 2020

Auditors report signed 15 August 2020

Annual report mailed to members 22 August 2020

You are aware that the following independent and material events have occurred.

1. On 8 July 2020, the federal government announced that it intends to introduce legislation sometime in September removing the current tax concessions enjoyed by clubs such as New Generation Club. The changes will result in New Generation Club being subject to the same tax rules that apply to companies. At present, the tax laws are such that New Generation Club pays taxes only on net income from non-members, which represents about 10% of total net income. The clubs board of management, in conjunction with other clubs in the state, intends to lobby the government to reverse its decision. The board is confident the clubs tax concessions will remain in place.

2. On 18 August 2020, the financial controller informed you that a serious fire occurred in one of the clubs kitchens during a football celebration. Although covered by insurance, the fire caused extensive damage to the bistro area and the adjacent bar. Both the bistro and bar are expected to remain unserviceable until at least mid-September, resulting in an expected fall in revenue of around 7%.

Required: For each event:

a. What are auditors responsibilities toward the subsequent event?

b. What are the audit evidences/procedures need to be obtained/performed to examine the effect on the financial statements for the year 30 June 2020?