Monthly Project Status Report Meeting

Below is a scenario involving a common reporting situation in which the project manager needs to make an ethical decision on how the projects status is reported. Submit an essay in which you describe in detail how you would respond to this situation and why.
A Day in the Life of a PM: Monthly Project Status Report Meeting
While you are preparing for a monthly project status report meeting with your client and leadership team, you receive word from a project team member about a serious technical problem on the project that will negatively impact the projects time line. This last-minute update is not good; the executive project steering committee restated earlier this week that meeting the completion date was priority one.

You are confident that the problem can be resolved, and that any delays can be made up and the project can get back on schedule.
However, in similar situations in the past, the client has demanded a meeting with the entire project team to discuss the issue in detail and taken additional micro-managing actions until the issue was resolved. These additional steps resulted in further delays to the project time line.

What should you tell the project sponsor, and the leadership team, during the monthly project status meeting?

Use This book as a reference
Larson, E., & and Gray, C. (2014). Project management: The managerial process. (6th ed.). New York, NY: McGraw-Hill.