Question

during an audit engagement, robert wong, cpa, has satisfactorily completed an examination of accounts payable and other liabilities and now plans to determine whether there are any loss contingencies arising from litigation, claims, or assessments. what are the audit procedures wong should follow with respect to the existence of loss contingencies arising from litigation, claims, or assessments? do not discuss reporting requirements.

Answer 1

During an audit engagement, Robert Wong, CPA, should follow certain procedures to determine the existence of loss contingencies arising from litigation, claims, or assessments. These include obtaining a legal letter, analyzing legal invoices, and evaluating management inquiries or legal expenses.

Step-by-step explanation:

When determining whether there are any loss contingencies arising from litigation, claims, or assessments, Robert Wong, CPA, should follow certain audit procedures. These include:

1. Obtaining a legal letter: This involves requesting a letter from the client's legal counsel to identify potential litigation, claims, or assessments that may lead to loss contingencies.
2. Analyzing legal invoices: Reviewing legal invoices can provide insights into ongoing legal matters and potential loss contingencies.
3. Evaluating management inquiries or legal expenses: Communicating with management or legal counsel can help gather information about potential loss contingencies.