Reference no: EM132742358

Question: Your client is DarwinCorp Pty Ltd ("DarwinCorp"), a diversified business operating throughout Australia. Year-end was 30 June 2016, the auditor's report was signed on 31 July 2016 and the financial statements were mailed to shareholders on 14 August 2016.

During your subsequent events review, you noted the following independent and material items:

1. DarwinCorp has been involved in a legal dispute with a competitor for a number of years. The dispute relates to alleged breaches of copyright by DarwinCorp. On 27 July, you discovered that DarwinCorp had settled the legal action out of court on terms more favorable than expected.

2. As for (1) above, except that the legal action was settled on 5 August.

3. On 10 July, one of DarwinCorp's major product lines developed a fault that rendered the product unusable. DarwinCorp became aware of the fault on 30 July. Although the fault posed no safety risks to consumers, DarwinCorp decided to launch a full product recall on the following day.

4. On 30 July 2016, the Bureau of Meteorology issued a cyclone warning for parts of Far North Queensland. DarwinCorp has a large sugar cane plantation in this area. On 2 August, the cyclone hit, wiping out about 90% of the crop.

5. In early June, one of DarwinCorp's largest debtors informed DarwinCorp that it was experiencing serious financial difficulties. On 5 July, DarwinCorp was informed that the debtor had gone into receivership. Preliminary reports suggest DarwinCorp will recover only 10 cents in the dollar of the outstanding debt. REQUIRED:

(a) Outline the critical additional procedures you should have performed in relation to each of the above events.

(b) What actions should you have recommended to management in relation to each of the above events?