Management furnishes the auditor with information concerning litigation,claims,and assessments.Which of the following is the auditor's primary means of initiating action to corroborate such information?
A)Request that the client's lawyers undertake a reconsideration of matters of litigation,claims,and assessments with which they were consulted during the period under examination.
B)Request that the client's management send a letter of inquiry to those lawyers with whom management consulted concerning litigation,claims,and assessments.
C)Request that the client's lawyers provide a legal opinion concerning the policies and procedures adopted by management to identify,evaluate,and account for litigation,claims,and assessments.
D)Request that the client's management engage outside lawyers to suggest wording for the text of a footnote explaining the nature and probable outcome of existing litigation,claims,and assessments.

Question

Quizplus · Accepted Answer

The auditor's primary means of initiating action to corroborate information concerning litigation, claims, and assessments furnished by management is to request that the client's management send a letter of inquiry to those lawyers with whom management consulted regarding such matters. This is because the lawyers are likely to have the most relevant and reliable information regarding these matters, and the auditor can obtain independent confirmation through the letter of inquiry. Options A, C, and D are not appropriate as they do not directly address the need to corroborate information provided by management.

Management Furnishes the Auditor with Information Concerning Litigation,claims,and Assessments