The Primary Reason an Auditor Requests Letters of Inquiry Be

question 307

Multiple Choice

The primary reason an auditor requests letters of inquiry be sent to a client's attorneys is to provide the auditor with:

• A) The probable outcome of asserted claims and pending or threatened litigation.
• B) Corroboration of the information furnished by management about litigation, claims, and assessments.
• C) The attorneys' opinions of the client's historical experiences in recent similar litigation.
• D) A description and evaluation of litigation, claims, and assessments that existed at the balance sheet date.

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Definitions:

Forward Trade

A non-standardized contract between two parties to buy or sell an asset at a specified future date for a price that is agreed upon today.

Spot Exchange Rate

The current price for exchanging one currency for another for immediate delivery, reflecting the value of one currency in terms of another at a specific moment in time.

Forward Trade

A financial contract agreement to buy or sell assets at a specified future date and price, used primarily in commodity and currency markets.

Forward Exchange Rate

The agreed upon exchange rate for a currency pair to be traded at a future date, used in hedging and speculation.