58 A CPA firm is auditing a technology company that is involved in a patent dispute...

 

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58 A CPA firm is auditing a technology company that is involved in a patent dispute with a competitor The company has set up a contingent liability of $1 million for a potential loss resulting from a lawsuit filed by the competitor. The auditors believe that there is a high amount of uncertainty associated with the estimate for the contingent liability and want to assess the validity of the amount. Which substantive procedure should these auditors use? Review court documents for each of the pending cases and assess the likelihood of a negative judgment O Obtain a letter from the client's legal team outlining all potential claims and the likelihood of occurrence O Call the other party in the lawsuit to determine likelihood of a negative judgment against the client Send a confirmation to the presiding judge to determine the likelihood of occurrence 58 A CPA firm is auditing a technology company that is involved in a patent dispute with a competitor The company has set up a contingent liability of $1 million for a potential loss resulting from a lawsuit filed by the competitor. The auditors believe that there is a high amount of uncertainty associated with the estimate for the contingent liability and want to assess the validity of the amount. Which substantive procedure should these auditors use? Review court documents for each of the pending cases and assess the likelihood of a negative judgment O Obtain a letter from the client's legal team outlining all potential claims and the likelihood of occurrence O Call the other party in the lawsuit to determine likelihood of a negative judgment against the client Send a confirmation to the presiding judge to determine the likelihood of occurrence

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Obtain a letter from the clients legal team outlining all potential claims an... View the full answer