A Former Employee Was Fired Last Year for Stealing $500

A former employee was fired last year for stealing $500 from the company's petty cash drawer.The former employee is now suing the company for wrongful dismissal on the grounds that they should never have put him in-charge of the petty cash drawer.The company's lawyer does not think there is any chance the employee could win their suit.How should the company report the situation?

A) They should go back and restate the income statement from last year.
B) They should accrue a liability this period.
C) They should disclose the potential liability this period.
D) They should do nothing.