Rock School,Inc.has a matter of material litigation that is threatened,but that has not gone to trial.The auditor's consideration of such a matter will most likely include all of the following except
A)sending a letter to the client's attorneys for more information.
B)discussions of the matter with the client and their insurance adjuster.
C)confirmation with the harmed party regarding the amount that will be claimed.
D)assessment of whether accrual or disclosure by the client may be required in accordance with ASC 450 (SFAS No.5).

Question

Quizplus · Accepted Answer

The auditor is not required to confirm the amount that will be claimed with the harmed party. The auditor's role is to assess whether accrual or disclosure by the client is necessary in accordance with accounting standards. Therefore, options A, B, and D are all valid considerations for the auditor.