Question

An auditor should request that an audit client send a letter of inquiry to those attorneys who have been consulted concerning litigation, claims or assessments. The primary reason for this request is to provide:

a. the opinion of a specialist as to whether loss contingencies are possible, probably or remote
b. a description of litigation, claims, and assessments that have a reasonable possibility of unfavorable outcome
c. an objective appraisal of management's policies and procedures adopted for identifying and evaluating legal matters
d. corroboration of the information furnished by management concerning litigation, claims and assessments

Answer 1

The primary reason for requesting an audit client to send a letter of inquiry to attorneys consulted concerning litigation, claims, or assessments is to obtain corroboration of the information furnished by management concerning litigation, claims, and assessments(option d).

Step-by-step explanation:

The letter of inquiry to attorneys aims to corroborate or verify the information provided by management regarding litigation, claims, or assessments. This step is crucial in an audit process as it seeks independent confirmation from legal experts to validate or support the accuracy and completeness of the information furnished by the client.

Attorneys who have been consulted regarding legal matters possess specialized knowledge and insight into the potential outcomes and risks associated with ongoing or pending litigation, claims, or assessments. Their input helps the auditor to corroborate the details provided by management, ensuring that the information presented is reliable and accurately reflects the organization's legal situation.

Hence, the correct option is d. While the other options—such as obtaining opinions on the likelihood of loss contingencies, descriptions of potential unfavorable outcomes, or an objective appraisal of management's policies—might also be objectives in certain contexts, the primary purpose of requesting a letter of inquiry from attorneys is to corroborate the information provided by management to enhance the reliability of the audit process.