In an audit of contingent liabilities, which of the following procedures would be least effective?

Question

Quizplus · Accepted Answer

Choice "B" is correct. Customer confirmations relate to receivables, and would not be likely to disclose a contingent liability. Choice "A" is incorrect. A standard bank confirmation will most likely identify contingent liabilities because it contains confirmation of discounted drafts and/or guarantees of notes and/or other open letters of credit. Choice "C" is incorrect. Examining professional invoices may disclose a contingent liability. For example, invoices from attorneys may provide information regarding litigation, claims, and assessments. Choice "D" is incorrect. Reviewing the board minutes may identify a contingent liability. For example, the board may discuss contingencies during one of its meetings. Other procedures that may be effective in an audit of contingent liabilities include: Discussing long-term purchase commitments with the purchasing agent. Reviewing long-term leases. Obtaining a client representation letter.

In an Audit of Contingent Liabilities, Which of the Following