Management Furnishes the Independent Auditor with Information Concerning Litigation, Claims

question 27

Multiple Choice

Management furnishes the independent 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 client lawyers undertake a reconsideration of matters of litigation, claims, and assessments with which they were consulted during the period under examination.
• B)Request that client management send a letter of inquiry to those lawyers with whom management consulted concerning litigation, claims, and assessments.
• C)Request that client 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 client management engage outside attorneys 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:

Weighted Average Delay

implies the average time delay in a process or system, adjusted for the importance or frequency of each delay component.

Collection Delay

The time lapse between when a payment is made by a customer and when the funds become available to the recipient company.

Average Amount

The mean sum of a group of numbers, calculated by dividing the total by the quantity of numbers.

Weighted Average Float

The average time between when a check is deposited in a bank and when the funds are available.