The field work for the December 31, 2021, audit of Adirondack Brewing Company was finished February 19, 2022, and the completed financial statements, accompanied by the signed audit reports, were mailed March 6, 2022.
On February 18th, 2022, Adirondack Brewing lost a court case that had originated in 2021 for an amount equal to the lawsuit. The amount is currently disclosed in the draft financial statement as the company's legal counsel counseled that in their opinion Adirondack would prevail in the case.
For this highly material event, indicate the appropriate action from the alternatives listed below.
Group of answer choices
Adjust the December 31, 2021 financial statements.
Disclose the information in the December 31, 2021 financial statements.
Request the client to recall the December 31, 2021 financial statements.
No action is required.