What action should you recommend to management

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Reference no: EM133207416

Problem:

FashionTrend Ltd is a retail clothing company operating in Australia with annual revenue of around $10 million. Its products are manufactured by a supplier in Bangladesh and others in China. On 1 May, the company placed a deposit of $500,000 with the supplier in Bangladesh for an order to be delivered in July. On 10 June, the building where the supplier manufactured FashionTrend's products collapsed. Hundreds of people were killed or injured. The supplier has closed and is under investigation for ignoring safety concerns of the local authority. As such, the deposit may not be recovered. The financial year-end is 30 June 2022, and the auditor's report will be signed on 15 August 2022.

i) Identify and explain the type of the above subsequent event. Is the event material? Explain your answer.

ii) Explain what further evidence you would seek in relation to the above event. What action should you recommend to management?

Reference no: EM133207416

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