You are the auditor for XZ Limited (XZ) for the financial year ending 30 June 2016. Fieldwork for the XZ engagement was finished on 21 August 2016 and the audit report is due to be signed on 27 August 2016. On 7 July 2016, a large sale was made by XZ to KKK, an overseas customer. The sale was made at a considerable discount below the cost of the inventory at which it was documented on balance date. Which of the following describes the most appropriate action, if any, you would require XZ's management to undertake in relation to the financial statements?

A. Adjust the financial statements.

B. No action required.

C. Disclose by way of note to the financial statements.

D. Disclose by way of contingent liability note to the balance sheet.

4) You are the auditor for XZ Limited (XZ) for the financial year ending 30 June 2015. Fieldwork for the XZ engagement was finished on 21 August 2015 and the audit report is due to be signed on 27 August 2015. On 7 July 2015, a large sale was made by XZ to KKK, an overseas customer. The sale was made at a considerable discount below the cost of the inventory at which it was documented on balance date. Which of the following describes the most appropriate action, if any, you would require XZ's management to undertake in relation to the financial statements?

a. Adjust the financial statements.

b. No action required.

c. Disclose by way of note to the financial statements.

d. Disclose by way of contingent liability note to the balance sheet.