ASA560 includes the following statement:

"If, after the financial report has been issued, a (material) fact becomes known to the auditor that, had it been known to the auditor at the date of the auditor's report, may have caused the auditor to amend the auditor's report,..." (AUASB, 2015)

Required:

Based on the statement provided above from ASA560, explain the actions required of the auditor in this situation, that is, where a material fact arises after the financial report was issued. (4 marks)

What are the potential risks to the auditor when this problem arises? Discuss.