6. Subsequent Event (20%) Below here were subsequent event that occurs in your client. Consider that all events were has material effect on client's financial statement. The auditor is auditing financial statement for the year ended December 31, 2018, and is completing the audit in March 15, 2019. 1) On January 10, 2019, auditor found that client made overstatement to their inventory account on 2018 year-end financial statement 2) On January 14, 2019, the court ruling said that the client must pay compensation for the accident that occurred on November 20, 2018 3) On January 31, 2019, client announced that they do share split 2 for 1 for their entire common shares 4) The client purchased raw material that was received just before year-end. The purchase was recorded based on its estimated value. The invoice was not received until February 5, 2019, and the cost was substantially different than was estimated 5) On February 20, 2019 a major of client customer filled for bankrupt 6) On April 1, 2019 fire rage accident destroy client warehouse and the loss were material Questions: a. Indicate type 1 subsequent event, type 2 subsequent event, or not subsequent event. What kinds of action, client need to do? adjust, disclose, or no need to do adjust/disclose for every point form 1) to 6). Provide the reason why it should be adjust or disclose or neither. (10%) Verified by Bambang Leo Handoko (D5271) and sent to Department/Program on July 30, 2020 Page 2 of 3 FM-BINUS-AA-FPU-78/V2RO b. What will you do, if the client refused to make appropriate adjustment or disclosure even after you inquiry with them and provide working paper and evidence as your supporting suggestion? What will you do then? (10%)