You are the auditor of South Face, a public company. South Face ("the Company") manufactures and distributes ski and snowboard equipment worldwide through a network of independent distributors. You are conducting the audit for the year ended December 31, 2019. The following unrelated events occur and/or come to your attention after the balance sheet date but before the date of your opinion on the financial statements (February 28, 2020):

1. South Face's largest customer, Ratagonia, filed bankruptcy (due to deteriorating financial condition) in January 2020. South Face has a material accounts receivable balance due from Ratagonia as of December 31, 2019.

State the appropriate action for the situation:

A. Adjust the December 31, 2019 financial statements

B. Disclose the information in a footnote to the December 31, 2019 financial statements but

do not adjust the 2019 financial statements

C. No action is required