Danone produces a range of dairy products in one factory. The products are stored in a nearby warehouse (lease) and then sold to 350 supermarkets located within 200 kilometers of the Danone factory. Products are perishable with an average shelf life of eight days. The end of the year in Danone's financial statements is 31 December. It has been four months since the end of the year for your Danone audit client, Danone's annual audit is almost completed, but the audit report has not yet been signed. The following events have just caught your attention. Both events took place at the end of April. 

(a) A fire at a warehouse leased by the company destroyed 60% of the warehouse stock held for resale. 

(b) A batch of cheese produced by Danone was found to contain some chemical impurities. Complaints were filed by more than 300 consumers. about food poisoning after eating cheese. 115 supermarkets have stopped buying Danone products, and another 85 have stopped buying. considering whether to stop buying from Danone. Lawyers acting on behalf of consumers are currently filing a material damages claim against Danone Required: For EACH of the events at Danone mentioned above:  

1) Describe the additional audit procedures you will perform 

2 ) Reasonably indicate whether a change to the year-end financial statements requires 

3) Discuss whether the audit report should be changed

Answer rating: 100% (QA)

The given problem relates to subsequent events ie events occurring between A date of financial statements date of audit report B facts that become known to auditor after date of auditors report For ev... View the full answer