Assume the fieldwork for the $30$ June $2024$ audit of DoBo ended on $20$ September $2024$ which was also the audit report date. The financial statements and auditor$$s report were issued and mailed to shareholders and presented at the AGM on $22$ September $2024$

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Required: In each of the material situations $(1$ through $8)$ following, state the appropriate action the auditor should take and explain$/$justify your answer.

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$1.$ On $14$ August $2024,$ you discovered that, on $15$ July $2024,$ a flood destroyed the entire uninsured inventory in one of DoBo$$s warehouses. $(2$ Marks$)$

Answer:

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$2.$ After enquiring from DoBo$$s lawyers regarding a lawsuit involving a material amount, the external auditors assessed the liability that can arise from this lawsuit as highly probable, but they are unable to finalise the amount involved. This matter is only discovered on $4$ July $2024.(2$ Marks$)$

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$3.$ On $15$ October $2024,$ the auditor discovered that, on $31$ September $2024,$ a fire destroyed the entire uninsured inventory in one of DoBo$$s warehouses. $(2$ Marks$)$

$$ Answer:

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$4.$ The auditor discover on $15$ July $2024$ that a lawsuit against DoBo, which was recorded in the financial statements as $$45000,$ was settled at an amount of $$20000.$ This is material. $(2$ Marks$)$

Answer:

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$5.$ On $5$ October $2024,$ you discovered that, on $2$ September $2024,$ a flood destroyed one of DoBo$$s $13$ plants. $(2$ Marks$)$