Problem:
After an audit report containing an unmodified opinion on a nonissuer's financial statements was dated and the financial statements issued, the client decided to sell the shares of a subsidiary that accounts for 30% of its revenue and 25% of its net income. The auditor should Take no action because the auditor has no obligation to make any further inquiries. Notify the entity that the auditor's report may no longer be associated with the financial statements. Determine whether the information is reliable and, if determined to be reliable, request that revised financial statements be issued. Describe the effects of this subsequently discovered information in a communication with persons known to be relying on the financial statements.