You are auditing Blue Pool Supplies Ltd, a listed company that specializes in pool supplies for distribution throughout Australia. It is now 6 August 2019 and you are finalizing your audit of Blue Pool Supplies’ financial report for the year ended 30 June 2019. The auditor's report and directors' declaration are due to be signed on 20 August 2019. As part of your completion procedures, you have noted the following material issues.

On 27 June 2019, one of Blue Pool Supplies’ Sydney warehouses collapsed. At the time of the incidents, the building and products were destroyed, including all of the forward sales orders for the month of July.

Management did not tell you about the incident when it occurred but has included a note in the financial report about it. They noted significant damage to the building and to the stock on hand at the time of the fire. Despite this, no adjustment has been made to Blue Pool Supplies’ 2019 financial report.

Required:

1. For the above events, identify and justify what action, if any, is most appropriate.
2. Assuming the same facts as for (a), except that the incident occurred on 18 July 2019, identify and justify what action, if any, is most appropriate.

Assuming the same facts as for (a), except that the incident occurred on 25 August 2019, identify and justify what action, if any, is most appropriate

Answer rating: 100% (QA)

a Adjustments must be made for the 2019 financial year by the management of Blue Pool offers Ltd once the due date of 27 June 2019 for the event has been disclosed to the auditor for consideration of ... View the full answer