Final answer:
The least effective procedure when auditing contingent liabilities is examining customer confirmation replies, as these are typically related to confirming accounts receivable and not contingent liabilities.
Step-by-step explanation:
When auditing contingent liabilities, the procedure that would be least effective is c. Examining customer confirmation replies. Contingent liabilities are potential liabilities that may occur depending on the outcome of an uncertain future event. The auditor is interested in understanding any existing potential liabilities that the company may face.
- Reading the minutes of the board of directors (option a) can reveal discussions and decisions that may give rise to contingent liabilities.
- Reviewing the bank confirmation letter (option b) may inform the auditor of any undisclosed guarantees or other contingencies related to banking relations.
- Examining customer confirmation replies (option c) is generally related to the confirmation of accounts receivable balances and may not provide information about contingent liabilities.
- Examining invoices for legal services (option d) can provide insights into legal matters that might give rise to contingent liabilities.