A is corrent because when an auditor becomes aware of information which relates to financial statements previously reported on by him/her and which existed at the date of the report, but which was not known to the auditor at the date of the report, inquiries are required if the additional information is of such a nature and from such a source that s/he would have investigated it had it come to his/her attention during the examination.
B is incorrect because an investigation by a peer review committee will not necessarily result in further audit procedures.
C is incorrect because the development occurred after the report was issued. The auditor need not consider making further inquiries regarding information which comes to his/her attention unless it existed at the date of the report.
D is incorrect because the contingency had been considered during the audit and the report was qualified. An auditor has no obligation to make any further inquiry or perform any other auditing procedures with respect to the audited financial statements covered by his/her report, unless new information which may affect the report comes to his/her attention. In this case, it is unlikely that the new information regarding the loss contingency would affect the report since it had been qualified.
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