The auditor has sent inquiry letters to all of the client's law firms.Two law firms stated that the client was unlikely to win the lawsuits in question,whereas the client had said the opposite.What action should the auditor take?
A)Ask management for invoices supporting the omitted lawsuits.
B)Request a meeting with management and the respective law firms.
C)Ask the law firms to provide additional details with respect to the lawsuits.
D)Change control risk to maximum and increase substantive testing.

Question

Quizplus · Accepted Answer

The discrepancy in opinion between the client and two of its law firms indicates a potential misstatement in the financial statements. Therefore, the auditor should request a meeting with both management and the respective law firms to obtain further information and clarify the situation. This would enable the auditor to obtain a more comprehensive understanding of the issues involved and assess the impact of any potential misstatement on the financial statements.

The Auditor Has Sent Inquiry Letters to All of the Client's