In connection with his audit of the December 31, 2017 financial statements of Smith Band Supply, Inc., Norman Godwin, CPA, observed the following material item. Fieldwork was completed on February 14, 2018 and the audit report was issued on February 20, 2018. On March 28, 2018, Norman Godwin, CPA discovered that Kevin Wright Enterprises, a major customer of Smith Band Supply, filed for bankruptcy as a result of a devastating flood on March 5, 2018, for which Wright was uninsured. Kevin Wright Enterprises owed Smith Brand a significant amount of money at December 31, 2017. Because Kevin Wright Enterprises was uninsured, it is unlikely that the account will be paid. What should Godwin CPA do?

Group of answer choices

Propose an adjustment and disclosure to the 2017 financial statements

Either dual-date the audit report or expand all subsequent event tests to the new date

Take no action

Request the client to recall the December 31, 2017 financial statement for revision

Propose a note disclosure only to the 2017 financial statements

Answer rating: 100% (QA)

In the given case Kevin wright enterprises filed for bankruptcy as a result of a devastating f... View the full answer