A CPA Has Received an Attorney's Letter in Which No

question 116

Multiple Choice

A CPA has received an attorney's letter in which no significant disagreements with the client's assessments of contingent liabilities were noted. The resignation of the client's lawyer shortly after receipt of the letter should alert the auditor that:

• A) an adverse opinion will be necessary.
• B) undisclosed unasserted claims may have arisen.
• C) the auditor must begin a completely new examination of contingent liabilities.
• D) the attorney was unable to form a conclusion with respect to the significance of litigation, claims, and assessments.

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Definitions:

Limbic System

A sophisticated network of nerves and pathways in the brain, situated around the cortex's periphery, responsible for instincts and emotions. It governs fundamental feelings and motivations.

Addictive Disorders

A broad range of disorders that involve a compulsive need to use substances or engage in behaviors despite negative consequences.

Malfunctioning Reward Centers

A condition where the brain's reward system, which motivates behavior by releasing dopamine, does not work properly, leading to issues like addiction or depression.

Thalamus

A brain structure involved in sensory and motor signal relay and the regulation of consciousness and sleep.