The client's legal expenses should be examined to

Question

Quizplus · Accepted Answer

Examining the client's legal expenses helps to determine if there is any litigation pending or threatened. This information is crucial for assessing potential legal liabilities and risks that may impact the financial statements. Option A is not relevant because comparing legal expenses with attorney's letters does not provide useful information for the audit. Option B is also not relevant because determining types of fraud requires a separate fraud examination, which is beyond the scope of the audit. Option C is not relevant because recording vendor payables is a routine accounting function and does not require an audit examination.

The Client's Legal Expenses Should Be Examined to