Management Determined It Was Probable That a Pending Litigation Claim

question 167

Multiple Choice

Management determined it was probable that a pending litigation claim would result in a material loss. The loss was disclosed in the footnotes to the financial statements but was not accrued in the income statement. If the auditors believe an accrual should be made, what type of report should be issued?

• A)Standard report.
• B)Unqualified opinion with an explanatory paragraph.
• C)Qualified opinion based on a circumstance-imposed scope limitation.
• D)Qualified or adverse opinion based on a departure from GAAP.

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Definitions:

Thirty Years' War

A series of conflicts in Central Europe between 1618 and 1648, primarily fought over religious freedom and territory, but also involving dynastic concerns.

Peace of Westphalia

A series of peace treaties signed in 1648 that ended the Thirty Years' War in Europe, marking a turning point in international law by recognizing the concept of national sovereignty.

1648

The year that marked the end of the Thirty Years' War in Europe with the signing of the Peace of Westphalia, leading to a new political and religious order.

Fundamental Conflicts

Core disagreements or confrontations that are basic or essential to the nature of a situation, often driving the narrative or outcome.