Your Client's Balance Sheet Date Is 30/6/2012, the Audit Report

Essay

Your client's balance sheet date is 30/6/2012, the audit report date is 31/8/2012 and the financial statements are issued 15/9/2012. A customer with a material outstanding accounts receivable balance declared bankruptcy on 5/7/2012 due to a warehouse fire that occurred 27/6/2012. State whether this situation warrants an adjustment to the financial statements, disclosure in footnotes but no adjustment or no action is required. Justify your answer.