Your client is Disco Ltd, a company running a large venue including a bistro, bars and restaurants, and other club facilities. On 16 August 2020, the financial controller informed you that a serious fire occurred in one of the clubs kitchens during the football celebrations. 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 the end of October 2020, resulting in an expected fall in revenue of around 20%. The financial year-end was 30 June 2020, the auditors report was signed on 15 August 2020, and the financial statements were mailed to shareholders on 22 August 2020.

(i) Identify and explain the type of subsequent event in the above. (5 marks)

(ii) What further evidence would you seek in relation to the matter, and how should it be treated in the financial report? (5 marks)

(iii) The corroborating evidence confirms the event is material and pervasive. What audit opinion would be appropriate if the directors of Disco Ltd follow the auditors recommendations regarding the above event? Justify your answer.