Final answer:
The auditor's finding suggests the presence of related party transactions, which need to be disclosed in the financial statements due to their potential impact on the company's financial position.
Step-by-step explanation:
An independent auditor's discovery that Holdaway Corporation occupies office space, at no charge, in an office building owned by a shareholder, likely indicates the existence of related party transactions. These are transactions that take place between two parties who hold a pre-existing connection prior to the deal, which can be between family members, associates, or entities where one party has significant influence over the company. This finding would require disclosure in the financial statements because it may affect the financial position or profitability of the company if this benefit were to cease. Additionally, it points to potential corporate governance issues that could influence investor perception and valuation of the company.