Reference no: EM132743906

Question: The financial year of your audit client Bartex Lid, a company that both manufactures and imports toys for resale, ended on 31 December 2019. Your audit report was signed on 22 February 2020 and the financial statements were issued on 7 March 2020. Each of the following independent events, which the auditors have discovered after the end of the financial year, have a material effect on the financial statements: a) 16 February 2020 Bartex Ltd disposed of equipment that had not been used in operations since June 2019 for $255,000. The book value of the equipment on balance date and included in the financial statements was $1, 100,000. b) 28 February 2020 The Australian government declares the imported 'gel blaster' toy guns as unsafe, and subsequently has placed a ban on the sale of these items with immediate effect. Bartex Ltd has $400,000 worth of these items in inventory. Required: For each of the two events above, explain the auditor's responsibilities and the auditor's appropriate course of action.