To uncover liabilities from actual or potential litigation,which of the following procedures is required by CAS 501?
A)Sending an inquiry letter to suppliers with which the auditee normally does business
B)Sending an inquiry letter prepared to the auditee's lawyers.
C)Sending confirmations to the insurance companies with which the auditee has coverage.
D)Sending bank confirmations to all financial institutions with which the auditee has done business.

Question

Quizplus · Accepted Answer

According to CAS 501, the auditor is required to send an inquiry letter prepared to the auditee's lawyers to uncover liabilities from actual or potential litigation. This is because the lawyer is most likely to have information about any actual or potential litigation involving the auditee, and the inquiry can provide useful information about contingent liabilities that may not be reflected in the financial statements. Therefore, options A, C, and D are not relevant in uncovering liabilities from litigation.

To Uncover Liabilities from Actual or Potential Litigation,which of the Following