Recognized Subsequent Events
An auditor includes a disclosure in an annual financial report regarding a pending patent lawsuit. After the report is issued and the audit is completed, the company loses the lawsuit. If the auditor classified this as a recognized subsequent event, what action would be required?
A
No changes would need to be made.
B
The disclosure would need to be removed.
C
A new auditor's report would need to be appended.
D
The financial statements would need to be adjusted to reflect the outcome of the lawsuit.