Problem
Alana Ltd has been a client of Geoff & Oma Partners for many years. You are an audit senior and have been assigned to the Alana audit for the first time for the financial year ended on 30 June.2020.Alana's financial report for the year ended 30 June 2022 shows land and buildings at fair value of $21.4 million. As part of your subsequent events procedures, you become aware that Alana sold the property in July 2022 when an independent third party made an unexpected offer of $26 million. The difference between the sale price and the amount stated in the financial report (which has not been adjusted) is material. You have not yet signed the audit report.
Task
I. Analyze the events surrounding the sale of land and buildings. Is it a subsequent event? If so, which type?
II. How will this event be handled in the financial report?
III. Explain what reporting options are available to the auditor. Why?