You are the auditor of Bubo Ltd (Bubo) for the financial year ending 30 June 2021. The fieldwork for the Bubo audit was completed on 21 August 2021 and the audit report is due to be signed on 12 September 2021. On 25 August 2021, you discovered that Bubo settled a material lawsuit out of court that had originated in 2018 and has been listed as a contingent liability in the financial report since 2018. Which of the following describes the MOST appropriate action, if any, you would require Bubo's management to undertake in relation to the financial report? 

Select one: 

• Revise and reissue the 2018 financial report with the adjustment to the contingent liability. 
• Do nothing. 
• Adjust the 2021 financial report. 
• Disclose by way of subsequent event note to the financial report.