Which of the following material events occurring after the issuance of an auditor's report would most likely cause the auditor to make further inquiries about the previously issued financial statements to determine if they may need to be restated?
A. An uninsured flood occurs that may affect the entity's ability to continue as a going concern
B. A major contingency is resolved that had been disclosed in the audited financial statements
C. New information is discovered leading the auditor to believe that lease transactions during the
audit period should have been accounted for as capital rather than operating leases
D. A subsidiary is sold that accounts for 25% of the entity's consolidated revenues.
Answer: C. New information is discovered leading the auditor to believe that lease transactions during the
audit period should have been accounted for as capital rather than operating leases