Question

Auditors often request that the audit client send a letter of inquiry to those attorneys who have been consulted with respect to litigation, claims, and/or assessments. The primary reason for this request is to provide the auditor with

a. An estimate of the dollar amount of the probable loss.
b. An expert opinion as to whether a loss is possible, probable, or remote.
c. Information concerning the progress of cases to date.
d. Corroborative inquiries made of the client by the auditor.

Answer 1

Auditors request a letter of inquiry from attorneys to obtain an expert opinion on the likelihood of loss, information on the progress of legal cases, and corroborative evidence. Option b is correct..

Step-by-step explanation:

Auditors often request that the audit client send a letter of inquiry to attorneys who have been consulted about litigation, claims, and/or assessments. The primary reason for this request is to provide the auditor with an expert opinion as to whether a loss is possible, probable, or remote. Attorneys who specialize in legal matters can assess the likelihood and potential impact of pending cases or claims, which is valuable information for auditors.

By requesting a letter of inquiry from attorneys, auditors can gain insight into the current status and progress of the legal cases. This information is important for auditors to evaluate the potential impact of these legal matters on the financial statements of the audited entity. The letter of inquiry also serves as a corroborative inquiry, as it provides information from a third party, the attorney, about the litigation, claims, and/or assessments. This helps the auditor gather additional evidence and ensure the reliability of the information provided by the client.