Auditors, as Part of Completing the Audit, Will Request the Client

question 60

Multiple Choice

Auditors, as part of completing the audit, will request the client to send a standard inquiry to the client's attorney letter to those attorneys the company has been consulting with during the year under audit regarding legal matters of concern to the company. The primary reason the auditor requests this information is to

• A) determine the range of probable loss for asserted claims.
• B) obtain a professional opinion about the expected outcome of existing lawsuits and the likely amount of the liability, including court costs.
• C) obtain an outside opinion of the probability of losses in determining accruals for contingencies.
• D) obtain an outside opinion of the probability of losses in determining the proper footnote disclosure.

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Definitions:

Credit Sales

Credit Sales are sales made on credit, where the payment is received after the sale has been made, effectively extending a line of credit to the customer.

Note Receivable

A written promise for amounts to be received by a debtor, typically including interest, representing a credit instrument to the holder.

Specified Amount

A certain, defined quantity or sum mentioned in a financial document or agreement.

Definite Time

A specified, clear duration with a known start and end point.