Solutions for Chapter 11Problem 50MCQ: The primary reason auditors request responses to attorney letters is to provide auditorsa. The probable outcome of asserted claims and pending or threatened litigation.b. Corroboration of the information furnished by management about litigation, claims, and assessments.c.
Subcommittee on Audit Inquiry Responses, 45 (4): 2245–52 (Aug. 1990) This Report considers the use of certain statements in letters of the client or the lawyer to preserve the attorney-client privilege or the attorney work-product privilege. The Report was prepared in consultation with representatives of the Auditing Standards Division of the ...
Mar 23, 2017 · 132. The primary reason an auditor requests letters of inquiry be sent to a client’s attorneys is to provide the auditor with a. The probable outcome of asserted claims and pending or threatened litigation. b. Corroboration of the information furnished by management about litigation, claims, and assessments. c.
The primary reason auditors request responses to attorney letters is to provide auditors _____. 1. An evaluation of the likelihood of an unfavorable outcome of the matters disclosed by the entity; The attorney's opinion of the entity's historical experience in recent similar litigation; The probably outcome of asserted claims and pending or threatened litigation.
The purpose of the attorney's letter is to inform and certify to the auditor of any legal action against the client that could result in an adverse financial impact on the company's financial statements.
08 A letter of audit inquiry to the client's lawyer is the auditor's primary means of obtaining corroboration of the information furnished by management concerning litigation, claims, and assessments. ...
Audit Findings In each case, the audit letter typically requests documentation that must be returned to the IRS for review and the IRS will follow up after that information is reviewed. You also can send your own letter to the IRS explaining any issues that require resolution.
A legal confirmation or legal representation letter is an inquiry sent by an auditor (with their client's approval) to a law firm engaged by the client for the purpose of determining the status of litigation, claims and assessments pertaining to the audited client.Oct 1, 2019
Which of the following is the best reason why the auditors should consider observing a client's distribution of regular payroll checks? Separation of payroll duties is less than adequate for effective internal control. Total payroll costs are a significant part of total operating costs.
Inquiry consists of seeking information from knowledgeable persons in financial or nonfinancial roles within the company or outside the company. Inquiry may be performed throughout the audit in addition to other audit procedures. Inquiries may range from formal written inquiries to informal oral inquiries.
audit response letter provided to the auditor in which a lawyer provides information about loss. contingencies as of a date after the date of the lawyer's initial response to the audit inquiry letter. and any previous update.
The IRS will always inform you by mail that you have been selected for an audit. The agency will never contact you via phone or email to notify you of an audit. An audit letter will come from the IRS but might also note the US Treasury or Department of Treasury.
What information is typically requested in a legal letter to an entity's attorney? A list and evaluation of any pending or threatened litigation to which the attorney has devoted substantial attention.
Written representation – A written statement by management provided to the auditor to confirm certain matters or to support other audit evidence.
A power of attorney (POA) or letter of attorney is a written authorization to represent or act on another's behalf in private affairs, business, or some other legal matter. ... The one authorized to act is the agent, attorney, or in some common law jurisdictions, the attorney-in-fact.
The Legal Confirmation Process In coordination with the client, auditors prepare an audit inquiry or legal representation letter. The letter is signed by the client, and the auditor must then control delivery of the letter to the law firm. Auditors ask that lawyers respond by their anticipated audit completion date.
What information is typically requested in a legal letter to an entity's attorney? A list and evaluation of any pending or threatened litigation to which the attorney has devoted substantial attention.
An attorney's letter is the primary method used to corroborate information on litigation, claims, and assessments.
A lawyer's refusal to furnish the information requested in an inquiry letter either in writing or orally (see paragraphs . 09 and . 10) would be a limitation on the scope of the audit sufficient to preclude an unqualified opinion (see section 508.22 and . 23).
Written representation – A written statement by management provided to the auditor to confirm certain matters or to support other audit evidence.
An audit letter of representation is a form letter prepared by a company's service auditor and signed by a member of senior management. In the letter, management attests to the accuracy and completeness of the information provided to the service auditors for their analysis.Aug 29, 2018
Confirmation letters are important because they provide an independent verification of your organization's finances. ... Your auditor might also send letters to other parties asking them to verify cash, inventory, notes payable, legal matters, contracts, or any unusual transactions.Jul 29, 2020
Which of the following audit procedures is most likely to be conducted only after year-end? Evaluation of management's adjusting journal entries to the financial statements.
Which of the following substantive procedures would auditors most likely perform to obtain evidence about the occurrence of subsequent events? Investigate changes in shareholders' equity occurring after the date of the financial statements.
AICPA rules state that an accountant's independence will be impaired if the accountant: makes investment decisions on behalf of audit clients or otherwise has discretionary authority over an audit client's investments. executes a transaction to buy or sell an audit client's investment.
08 A letter of audit inquiry to the client's lawyer is the auditor's primary means of obtaining corroboration of the information furnished by management concerning litigation, claims, and assessments. ...
Which of the following is the best reason why the auditors should consider observing a client's distribution of regular payroll checks? Separation of payroll duties is less than adequate for effective internal control. Total payroll costs are a significant part of total operating costs.
Reviewing confirmation of loans receivable and payable for indications of guarantees is one of the auditing procedures that will assist the auditor in identifying related party transactions.
1. Remind the clients officers of their primary responsibility for the financial statements. 2. Provide evidence that management believes that adjusting entries brought to its attention by the auditors and not made are not material.
Extant ISA 580 requires the auditor to obtain written representations on matters material to the financial statements when other sufficient appropriate audit evidence cannot reasonably be expected to exist.Dec 31, 2006
A management representation letter is obtained by the auditor to reduce the possibility of a misunderstanding concerning management's responsibility for the financial statements and to document the representations made by management during the course of the audit.
attorney letter - A communication prepared by the client but sent by the auditors to the client's attorneys that details all pending litigation, claims, and assessments against the client and that requests the attorneys to comment on these matters directly to the client's auditors.
1. An evaluation of the likelihood of an unfavorable outcome of the matters disclosed by the entity; The attorney's opinion of the entity's historical experience in recent similar litigation; The probably outcome of asserted claims and pending or threatened litigation. 2.
What is not required by generally accepted auditing standards (GAAS)? 1. written representations - A written assertion provided by management to auditors related to the financial statements, the information provided to the auditors, and management's internal control over financial reporting to confirm certain matters and support other evidence ...
XYZ completed the preparation of year 1 financial statements on February 13, year 2 , and its auditors began the fieldwork on February 17, year 2. Hall completed gathering sufficient appropriate evidence on March 24, year 2; Hall's report and XYZ's financial statements were released on March 28, year 2. The written representation normally would be ...
A merger that was announced by Mays and known by Ambrose on February 12, 2015. Ambrose is auditing the financial statements of Mays (dated December 31, 2014). The date of the auditor's report is February 17, 2015, and the audit report release date is February 20, 2015.
Auditors must make several determinations when it “detects or otherwise becomes aware of information indicating that an illegal act (whether or not perceived to have a material effect on the financial statements of the issuer) has or may have occurred”
In fact, “shadow investigations” by auditors are becoming increasingly common relating to matters subject to litigation or arbitration.
A possible alternative to achieve both goals is to invoke the work product privilege which typically protects information prepared by a party and its counsel in anticipation of litigation
Importantly, the work product privilege is not automatically waived by disclosure to an auditor. For a waiver to occur, the information must be disclosed to an adversary or create a risk that the information will be disclosed to an adversary.
Majority Rule: Disclosure of work product to an auditor does not waive the work product privilege. The power to issue an adverse opinion or the need to scrutinize and investigate a company’s books and records does not rise to the level of an “adversary”.
An attorney's letter is the primary method used to corroborate information on litigation, claims, and assessments. The primary reason auditors request responses to attorney letters is to provide auditors. a The attorney's opinions of the client's historical experiences in recent similar litigation.
Which of the following best describes the role of analytical procedures near the end of the audit engagement?#N#a. To identify possible deficiencies in the client's internal control over financial report ing.#N#b. To provide an overall review of the financial information and assessment of the adequacy of evidence gathered during the audit#N#engagement.#N#c. To gather evidence to support one or more assertion (s) related to the account balance or class of transaction s.#N#d. To identify accounts that appear to be misstated with the intention of planning the nature, timing, and extent of other#N#substantive procedures.
Hall completed gathering sufficient appropriate evidence on March 24, year 2; Hall's report and XYZ's financial statements were released on March 28, year 2.