Up to 1 mark per valid point, overall maximum of 5 marks per event.
Event 1 – Fire
– Provides evidence of conditions which arose subsequent to the year end
– Non-adjusting event, requires disclosure if uninsured losses material
– Calculation of materiality
– Obtain schedule of damaged property, plant and equipment and agree values to asset register
– Obtain distribution/despatch records to confirm damaged inventory levels
– Review correspondence with insurance company
– Discuss with the directors if they will make disclosures
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5

Event 2 – Inventory
– Provides evidence of conditions at the year end
– Inventory to be adjusted to lower of cost and net realisable value
– Calculation of materiality
– Discuss with the directors if they will write down the inventory to net realisable value
– Review board minutes
– Obtain schedule of defective inventory, agree to supporting documentation
– Discuss with directors basis of the scrap value
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 5