Question

Fulton Educational Company, Inc. has a matter of material litigation that is threatened, but that has not gone to trial. The auditor's consideration of such a matter will not include which of the following?

a. Sending a letter to the client's attorneys for more information.

b. Discussing the matter with the client and their insurance adjuster.

c. Confirming with the harmed party regarding the amount that will be claimed.

d. Assessing whether accrual or disclosure by the client was reported in accordance with GAAP.

Answer 1

The auditor's consideration in a threatened but not yet gone to trial material litigation does not include confirming the amount claimed by the harmed party.

Step-by-step explanation:

The subject of this question falls under the category of Business.

Answer:

When considering a matter of material litigation that is threatened but has not gone to trial, the auditor will not confirm with the harmed party regarding the amount that will be claimed. This is because the harmed party's claim has not yet been substantiated through the legal process and the amount determined is uncertain at this stage.

Therefore, option c. Confirming with the harmed party regarding the amount that will be claimed is not part of the auditor's consideration in this scenario.