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CASE - You are the auditor of Bangholme Pty Ltd (Bangholme), a wholesaler of books. Bangholme's financial year ended on June 30th 20X1. Your audit report was signed on July 22nd 20X1, and the financial statements were due to be issued on August 26th 20X1. On July 31st 20X1, you became aware that, two weeks earlier, a major debtor of Bangholme went into receivership. The debtor's problem arose as a consequence of an uninsured loss from a fire at the beginning of that month.
Discuss the auditor's responsibilities with respect to the above event. If you believe that the auditor has a responsibility, outline the audit work that would be appropriate. Assume that management of Bangholme will accept any requests you make of it.
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