During an engagement in one of the subsidiaries of an organization, an internal auditor noted the following in the workpapers:

"As a subsidiary of a multinational organization in this particular country, the entity is required to register annually with the

respective ministry. However, the subsidiary did not submit the required documentation for registration during the prior year. Failure

to comply with internal and external regulations could lead to penalties or fines from the respective authorities. It is recommended

that the management of the subsidiary ensures compliance with the relevant legislation. As a recoverable action, management

should register the subsidiary in the current year as soon as possible."

What part of this narrative represents a condition of the observation made by auditors in the final report?