Final answer:
A refusal by a lawyer to provide litigation-related information typically results in a qualification of the audit report because the auditor cannot obtain sufficient appropriate audit evidence which creates uncertainty about the accuracy and completeness of the financial statements.
Step-by-step explanation:
A refusal by a lawyer to furnish information related to litigation included in the letter of inquiry can have serious implications for an audit. Typically, during an audit, lawyers are expected to provide information concerning litigation as this can have a significant impact on the financial statements of a company. If a lawyer refuses to provide this information, it does not lead to the confirmation of related lawsuits with the claimants or an assessment that loss of the litigation is probable. It also does not directly lead to an adverse opinion, which is a situation where the financial statements are not presented fairly in all material respects.
However, the auditor relies heavily on the lawyer's response to assess the company's liabilities and contingencies. Therefore, without this crucial information, the auditor may not be able to obtain sufficient appropriate audit evidence. This can lead to a qualification of the audit report, which is an indication that except for the matters to which the qualification relates, the financial statements give a true and fair view. This situation can arise because the incomplete response from the lawyer introduces an uncertainty that prevents the auditor from being able to conclude that all aspects of the financial statements are accurate and complete.