Fulton Educational Company,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 not include which of the following?

Question

Quizplus · Accepted Answer

The auditor is not required to confirm with the harmed party regarding the amount that will be claimed in a threatened litigation. The amount claimed is usually uncertain and subject to change, and the auditor's responsibility is to evaluate whether the potential liability associated with the litigation has been appropriately accrued or disclosed in accordance with GAAP. The auditor may also communicate with the client's attorneys and insurance adjusters for more information and discuss the matter with the client.