Each of the following is an independent situation related to a contingency. Describe what the auditor...

Each of the following is an independent situation related to a contingency. Describe what the auditor should do in each case.

The lawyer refused to furnish the requested information.

The lawyer was unable to form an opinion on the probability or amount of a pending lawsuit, but the auditor believes that the amount could be material.

The client stated that it had not consulted lawyers during the past year.

Solutions

Expert Solution

(1). When lawyer refused to furnish the requested information then there is clear role of the auditor because it is expected from the auditor to maintain true disclosure of all relevant information about any firm & company. Hence in this case too the auditor should report this matter in the notes to account and also should disclose the impact of this event on the other relevant facts of this company.

2. When the lawyer was unable to form an opinion on the probability or amount of a pending lawsuit then role of an auditor becomes much important because the auditor believes the amount could be material. Hence auditor need to report this fact under notes to accounts. Apart from this auditor also need to disclose the reasons for forming the opinion which was not formed by the lawyer.

3. It is not necessary and compulsory that client should consulting a lawyer because for such cases management of the company is responsible. So as a result auditor need to disclose necessary statements in his & her report if any.

ekkarill92 answered 10 months ago

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