Question

You are the supervisor on the audit of New Generation Club, a large suburban club in New South Wales. As well as the usual club facilities such as poker machines, bars and a bistro, the club also operates a large gymnasium, an indoor heated pool and a restaurant. The following dates are relevant to the current audit engagement: End of the reporting period 30 June 2019 Financial statements signed 15 August 2019 Auditor’s report signed 15 August 2019 Annual report mailed to members 22 August 2019 You are aware that the following independent and material events have occurred.

1. On 1 August 2019, you read the minutes of a board meeting held on 15 July 2019. The minutes note that merger discussions with a nearby bowling club are progressing smoothly and the matter will be put to a vote of members on 30 October 2019. Costs associated with putting the issue to a vote (currently not included in the 30 June 2019 financial statements) are approximately $50 000.

Required: For each event:

a. What are auditors’ responsibilities toward the subsequent event?

b. What are the audit evidences/procedures need to be obtained/performed to examine the effect on the financial statements for the year 30 June 2019?

Answer 1