$16-35$

On July $27,20$X$0,$ Arthur Ward CPA, issued an unqualified audit report on the financial statements of Dexter Company for the year ended June $30,20$X$0.$ Two weeks later, Dexter Company mailed annual reports, including the June $30$ financial statements and Ward$$s audit report, to $150$ stockholders and to several creditors of Dexter Company. Dexter Company$$s stock is not actively traded on national exchanges or over the counter.

On September $5,$ the controller of Dexter Company informed Ward that an account payable for consulting services in the amount of $$170,000$ had inadvertently been omitted from Dexter$$s June $30$ balance sheet. As a consequence, net income for the year ended June $30$ was overstated by $$90,500,$ net of applicable federal and state income taxes. Both Ward and Dexter$$s controller agreed that the misstatement was material to Dexter$$s financial position at June $30,20$X$0,$ and operating results for the year that ended.

What should Arthur Ward$$s course of action be in this matter? Discuss.