In an Audit of Contingent Liabilities, Which of the Following

question 42

Multiple Choice

In an audit of contingent liabilities, which of the following procedures would be least effective?

• A)Examining customer confirmation replies.
• B)Reviewing a bank confirmation letter.
• C)Examining invoices for professional services.
• D)Reading the minutes of the board of directors meetings.

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Definitions:

Negligence

A failure to behave with the level of care that someone of ordinary prudence would have exercised under the same circumstances, leading to harm or damage.

Malpractice Claim

A malpractice claim is a lawsuit brought against a professional (commonly in healthcare) for negligence or failure to perform their duties to an acceptable standard, resulting in harm to a client or patient.

Professional Indemnity Insurance

A type of liability insurance that helps protect professionals from claims made by their clients for errors or omissions.

GAAP

Generally Accepted Accounting Principles, which are a standard framework of guidelines for financial accounting.