MCQ NOTES FOR AUD 4 OTHER AUDIT PROCEDURES Flashcards
The auditor should inquire of management concerning pending or threatened litigation, and should obtain a letter from the client’s lawyer to corroborate this information. Included in this letter is either an identification of the omission of any pending or threatened litigation, claims, and assessments, or a statement that the list of such matters (as provided by management) is complete.
The auditor should inquire of management concerning pending or threatened litigation, and should obtain a letter from the client’s lawyer to corroborate this information. Included in this letter is either an identification of the omission of any pending or threatened litigation, claims, and assessments, or a statement that the list of such matters (as provided by management) is complete.
Note about how the letter is requested by the client’s management. it is only sent by and back to the auditor. its management’s inquiry of their legal.
The letter of inquiry to the client’s attorneys is a request made by client management. Due to attorney-client privilege, the attorney would not be able to respond to such a request made by any other party. Note that management would request the attorney to respond directly to the auditor.
Words to look for when asked about contingent liability responses in a legal counsel letter
probable (or improbable), reasonably possible, or remote. This is because if its probable and reasonably estimateable it requires a footnote/or entry.
The lawyer s/state the probability of loss. It will be worded differently but will clearly indicate the likelihood of loss. We need to be able to determine if a loss is noted properly because it depends on it being either remote/probable/reasonly possible because if a liability may have been needed to be recorded or disclosed. if its probable and estimateable it needs a recording.
An auditor performs concerning litigation, claims, and assessments which procedure?
The auditor should obtain assurance from management that it has disclosed all unasserted claims that its lawyer has advised are probable of assertion.
-The independent auditor’s procedures with respect to litigation, claims, and assessments should include discussing with management the controls adopted for identifying, evaluating, and accounting for litigation, claims, and assessments.
-Corroborating Evidence consists of BOD Minutes, confirmations, industry analysists’ reports, data about competitors, and info obtained during observation/inquiry/inspection. Corroborating evidence are/is not accounting records like initial entries and any supporting records (checks, invoices, contracts, ledgers, JEs, worksheets)
-Corroborating Evidence consists of BOD Minutes, confirmations, industry analysists’ reports, data about competitors, and info obtained during observation/inquiry/inspection. Corroborating evidence are/is not accounting records like initial entries and any supporting records (checks, invoices, contracts, ledgers, JEs, worksheets)
