Question

Management furnishes the independent auditor with information concerning litigation, claims, and assessments. Which of the following is the auditor's primary means of initiating action to corroborate such information?

A) Request that client lawyers undertake a reconsideration of matters of litigation, claims, and assessments with which they were consulted during the period under examination.
B) Request that client management send a standard inquiry to the client's attorney letter to those lawyers with whom management consulted concerning litigation, claims, and assessments.
C) Request that client lawyers provide a legal opinion concerning the policies and procedures adopted by management to identify, evaluate, and account for litigation, claims, and assessments.
D) Request that client management engage outside attorneys to suggest wording for the text of a footnote explaining the nature and probable outcome of existing litigation, claims, and assessments.

Answer 1

To corroborate information concerning litigation, claims, and assessments, an auditor requests a lawyer's confirmation letter from client management to the client's attorneys.

Step-by-step explanation:

The auditor's primary means of initiating action to corroborate information provided by management concerning litigation, claims, and assessments is to request that client management send a standard inquiry, known as a lawyer's confirmation letter, to the client's attorneys.

Those attorneys are the ones with whom management has consulted on these matters. This letter typically asks the attorneys to verify the accuracy of the information provided by management, disclose any additional matters that the information may not cover, and assess the potential outcome and financial implications of such litigation, claims, or assessments.

The auditor's primary means of corroborating information concerning litigation, claims, and assessments is to request that client management sends a standard inquiry to the client's attorney letter to those lawyers with whom management consulted concerning these matters.

Correct answer: B) Request that client management send a standard inquiry to the client's attorney letter to those lawyers with whom management consulted concerning litigation, claims, and assessments.