Question
Your firm is the external auditor of Hard Rock Ltd, a large and diversified entity, to which the following timelines apply A balance date of
Your firm is the external auditor of Hard Rock Ltd, a large and diversified entity, to which the following timelines apply
- A balance date of 30 June 2017
- Directors declaration and audit report to be signed on 28 July 2017
- Financial report and audit report to be mailed to shareholders on 4 August 2017
Required For each of the following independent and material situations, select the appropriate action from the list below, and justify your responses
A. Adjust the 30 June 2017 financial report
B. Disclose the information in a note at the 30 June 2017 financial report
C. Request that the client recall the 30 June 2017 financial report for revision
D. No action is required
Situation 1: On 15 June 2017, one of Hard Rock's major debtor (Beans Ltd) informed Hard Rock that it was experiencing serious financial difficulties. On 8 July 2017, Hard Rock was informed that the Beans Ltd has gone bankrupt.
Situation 2: Hard Rock owns a large coffee plantation in far North Queensland. On 16 July 2017, the Bureau of Meteorology issued a cyclone warning for parts of far North Queensland. On 18th July 2017 cyclone hit and wiped out 90% of the coffee plantation.
Situation 3: On 30th of August 2017, Hard Rock Ltd settled a lawsuit with Max Brown Ltd for twice the liability accrued in the financial statement
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