Management Furnishes the Auditor with Information Concerning Litigation,claims,and Assessments

question 23

Multiple Choice

Management furnishes the auditor with information concerning litigation,claims,and assessments.Which of the following is the auditor's primary means of initiating action to corroborate such information?

• A)Request that the client's lawyers undertake a reconsideration of matters of litigation,claims,and assessments with which they were consulted during the period under examination.
• B)Request that the client's management send a letter of inquiry to those lawyers with whom management consulted concerning litigation,claims,and assessments.
• C)Request that the client's lawyers provide a legal opinion concerning the policies and procedures adopted by management to identify,evaluate,and account for litigation,claims,and assessments.
• D)Request that the client's management engage outside lawyers to suggest wording for the text of a footnote explaining the nature and probable outcome of existing litigation,claims,and assessments.

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Definitions:

Coordination Problem

A coordination problem occurs when parties involved in an economic activity struggle to choose their strategies in a manner that leads to an optimal outcome for all due to a lack of information or a misalignment of incentives.

Centrally Planned Economies

Economic systems where all production, investment, prices, and incomes are determined by the government or a central authority.

Invisible Hand

A metaphor introduced by Adam Smith to describe how individuals' pursuit of self-interest can lead to societal benefits through the efficient allocation of resources.

Public Interests

The concerns, values, or benefits that are regarded as important by the general public and are taken into account in social or political decision-making.