Question

An auditor should obtain evidential matter relevant to all the following factors concerning third-party litigation against an entity except the:?

1) period in which the underlying cause for legal action occurred.
2) probability of an unfavorable outcome.
3) jurisdiction in which the matter will be resolved.
4) existence of a situation indicating an uncertainty as to the possible loss.

Answer 1

An auditor should obtain evidential matter concerning all aspects of third-party litigation except for the jurisdiction in which the matter will be resolved, as this is typically not relevant to the financial statements.

Step-by-step explanation:

An auditor is responsible for obtaining evidential matter relevant to various aspects of third-party litigation against an entity. They must consider the period in which the underlying cause for legal action occurred, the probability of an unfavorable outcome, and the existence of a situation indicating an uncertainty as to the possible loss. However, the jurisdiction in which the matter will be resolved is typically not a factor that auditors need to consider when obtaining evidential matter.