Reference no: EM132919120

In May 2020, you were selected to be a part of the audit team that would conduct the external financial statement audit of Ocean Fresh Pty Ltd (OFPL) for the year ended 30 June 2020.

Your client (OFPL) is a manufacturer of tinned shellfish products. It purchases fresh shellfish from local suppliers, and frozen shellfish from South East Asia and processes it into tins at its Darwin factory and then transports it by road to supermarkets around Australia.

During your audit, you became aware of the following material, but not pervasive, event:

• On 1 July 2020 a customer at a Palmerston supermarket purchased a tin of OFPL prawns and took it home to have with dinner. That night she became violently ill and was hospitalised.
• It was discovered that the cause of her illness was the tin of prawns, which was part of a contaminated batch made from a material batch of shellfish imported fi Asia.
• The customer suffered severe pain and paralysis that is likely to be permanent. As a result, she lodged a lawsuit against OFPL on 15 August 2020, to the serious long-term effects of her injuries.
• The financial statements and auditor's report are due to be finalised on 31 August 2020.

REQUIRED:

Problem 1: Explain how the event identified above should be treated by OFPL in the financial statements.

Problem 2: Outline the implications for the auditor's report, if any, assuming that this event is appropriately treated as per requirement (a). Justify your answer.

Problem 3: Determine the type of auditor's opinion that you should issue if OFPL does NOT appropriately reflect this event in the financial state. Justify your answer.

Problem 4: Determine the type of auditor's opinion that you should issue if OFPL will NOT allow you to obtain a solicitor's letter con