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17. You were the auditors of Numax Inc. for the year ended 31 December 2020. Fieldwork was completed on 15 February 2021, the audit report

17. You were the auditors of Numax Inc. for the year ended 31 December 2020. Fieldwork was completed on 15 February 2021, the audit report is to be dated 1 March 2021, and the financial report is to be issued on 15 March 2021. On 3 December 2020, Numax sold a material amount of inventory on credit to a new customer, Risky Ltd, and did not subsequently receive any payment. On 18 February 2021, you discovered that Ricky Ltd went bankrupt on 8 February 2021 and no funds are expected to be available to repay creditors. Assuming there are no other matters of note for the Numax engagement, in relation to the financial report, the required action by management is (select the appropriate number):

1 - No action is required

2 - Adjust the financial statements

3 - Disclose in the financial statements

4 - Disclose in the Director's Report

a. 1 b. 2 c. 3 d. 4

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