Following are a series of independent situations (i.e. do not let any one situation affect your view of the other situations). For each situation below, describe what action you believe you as the auditor should take in the given situation, and provide an explanation as to why you believe this is the correct course of action. 
For the purpose of this activity, recall that the financial statements are dated December 31, 2019.
Assume that the audit report will be dated February 15, 2020.
Date of the event
Event
January 9, 2020
A landowner who operates a farm through which the pipeline runs was digging a hole on his property and accidentally damaged part of the pipeline. ColAlta has filed a lawsuit claiming damages in the amount of $80,000.

January 13, 2020
One of the accounts payable clerks found an invoice under her desk dated August 2 of the fiscal year being audited. The invoice had accidentally slipped down behind her desk, and had never been entered into accounts payable. The amount was $267.

January 15, 2020
The provincial government of Alberta introduced a bill for debate in the Provincial Legislature to impose an environmental tax of 8% on all natural gas transmission revenues. If passed, the tax would begin in two years.

January 9, 2020
The state government of Idaho issued a draft paper proposing a 9% increase in state property taxes, which would include the portion of the pipeline running through that state.

date

event

response

explanation

Answer rating: 100% (QA)

According to accounting standard 4Contingencies and Events Occurring After the Balance Sheet Date de... View the full answer