Auditors Often Request That the Entity Send a Letter of Inquiry

question 11

Multiple Choice

Auditors often request that the entity send a letter of inquiry to those attorneys who have been consulted with respect to litigation,claims,and/or assessments.The primary reason for this request is to provide the auditor 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 inquiries made of the entity by the auditor.

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Definitions:

Accounts Receivable

Amounts receivable by a firm for goods or services rendered to customers, awaiting payment.

Fixed Asset Investment

The acquisition of long-term physical assets by a company to be used in its operations for generating income.

Depreciated

A decrease in the value of an asset over time, often due to wear and tear or obsolescence, recognized in accounting to allocate the cost of an asset over its useful life.

Salvage Value

The estimated residual value of an asset after it has completed its useful life and cannot be used for production.