An auditor has received a solicitor's letter in which no significant disagreements with the client's assessments of contingent liabilities were noted. The resignation of the client's solicitor shortly after receipt of the letter should
Alert the auditor that:
A) undisclosed unasserted claims may have arisen.
B) the solicitor was unable to form a conclusion with respect to the significance of litigation, claims and assessments.
C) the auditor must begin a new examination of contingent liabilities.
D) an adverse opinion will be necessary.

Question

Quizplus · Accepted Answer

The resignation of the client's solicitor shortly after receipt of the letter may indicate that there are undisclosed unasserted claims that have arisen, which could potentially have a significant impact on the client's contingent liabilities. Therefore, the auditor should be alert and investigate the situation further to ensure that all contingencies have been adequately disclosed and assessed.

An Auditor Has Received a Solicitor's Letter in Which No