A Client's Lawyer Is Unable to Form a Conclusion About

question 32

Multiple Choice

A client's lawyer is unable to form a conclusion about the likelihood of an unfavorable outcome of pending litigation because of inherent uncertainties. If the litigation's effect on the client's financial statements could be material but it is properly disclosed in the financial statements, the auditor most likely would:

• A) Issue a qualified opinion in the auditor's report because of the lawyer's scope limitation.
• B) Withdraw from the engagement because of the lack of information furnished by the lawyer.
• C) Disclaim an opinion on the financial statements because of the materiality of the litigation's effect.
• D) Issue an unqualified opinion without modification.

---

Definitions:

Deterrence Doctrine

A theory that argues that the threat of punishment can prevent people from committing crimes.

Certainty

The level of assurance or confidence that an event will occur or a statement is true.

Swiftness

The quality of moving quickly or the ability to act or respond in a fast manner.

Cloward

Refers to Richard Cloward, a sociologist known for his work on the theory of structural strain in causing delinquency and crime.