Auditors Often Request That the Audit Client Send a Letter

question 45

Multiple Choice

Auditors often request that the audit client send a letter of inquiry to those attorneys who have been consulted with respect to litigation,claims,or assessments.The primary reason for this request is to provide the auditors with:

• A)An estimate of the dollar amount of the probable loss.
• B)An expert opinion as to whether a loss is possible,probable,or remote.
• C)Information concerning the progress of cases to date.
• D)Corroborative audit evidence.

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Definitions:

Expected Cash Collections

Projected amounts of money a business anticipates receiving from its customers or clients over a specific period.

Estimated Direct Labor Cost

The anticipated cost of labor directly associated with the production of goods or services, typically estimated before production begins.

Budgeted Cost

Budgeted cost refers to the estimated financial expense allocated for a specific purpose or project within a certain period.

Raw Material Purchases

The acquisition of unprocessed materials that are required in the production or manufacturing of goods.