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What kind of subsequent event is this

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Question - On February 25th, 2017, you complete audit for your client, Porter electrical, whose year-end was Dec 31st, 2016. On March 5th, 2017, before the release of the financial statements, your client, settled and paid a personal injury claim of a former employee as a result of an accident that had incurred in April of 2016, and the initial claim made in June, 2016. The amount of the claim is material and the company had not previously recorded a liability.

Required -

a. What kind of subsequent event is this?

b. How should the auditor advise the client to account for it in the financial statements?

c. State and explain the two choices you have to date your audit report?

Reference no: EM132972066

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