Which of the Following Is Not an Audit Procedure That

question 33

Multiple Choice

Which of the following is not an audit procedure that the independent auditor would perform with respect to litigation, claims, and assessments in audit procedures for subsequent events and contingent liabilities?

• A)Inquire of and discuss with management the policies and procedures adopted for identifying, evaluating, and accounting for litigation, claims, and assessments.
• B)Obtain a legal letter.
• C)Obtain a written representation from management that all litigation, asserted and unasserted claims, and assessments have been disclosed.
• D)Confirm directly with the entity's lawyer that all claims have been recorded in the financial statements.

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Definitions:

Standard Price

The predetermined cost assigned to materials, labor, and overhead for the purpose of budgeting and cost control.

Actual Purchase Price

The specific cost paid for goods or services at the time of purchase, as opposed to the budgeted or standard cost.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that varies with the level of production, such as utilities or materials used in the production process.

Fixed Overhead Cost

Expenses that do not vary with the level of production or sales, such as rent, salaries, and insurance, related to the operation of manufacturing facilities.