Your Client Has Returned to You the Representation Letter That

question 27

Essay

Your client has returned to you the representation letter that they sent to their lawyer. The letter contains the following statement from the client's lawyer:
"the directors seem to underestimate the likelihood of losing the case, and the potential financial settlement amount. We believe that there is little chance of successfully defending the matter, and expect that there will be amounts payable in the vicinity of $3.million, not $1.million. We do however remind you that the matter is only in preliminary stages and could still go either way".
Has the auditor collected this evidence in the appropriate way? What should the auditor do in regards to the information provided by the lawyer?

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Definitions:

Psychological Disorders

Mental disorders characterized by dysfunctional thought, emotional, or behavior patterns that cause distress or impairment in functioning.

Physical Health

The state of the body being free from illness or injury and the capacity of the body to perform daily tasks effectively.

Arousal

A state of heightened physiologic and psychological activity.

Human Immune System

The human immune system is a complex network of cells, tissues, and organs that work together to defend the body against disease-causing pathogens.