1. A major procedure auditors rely on for evaluating known litigation and claims against a client is:

A		examination of documents supporting cash disbursements after the end of the client's fiscal year
B		confirmation with parties who have sued the client
C		inquiry of the client's attorneys
D		inquiry of the chief executive officer

2. To identify possible contingent liabilities, the auditor usually will:

A		consider whether information obtained in other audit areas indicate the possibility of a contingent liability
B		review internal revenue agent reports
C		review minutes of the board of directors and audit committee
D		perform all of the above procedures

3. Subsequent events that require adjustment in the financial statements include:

A		a lawsuit filed during the subsequent period against the company
B		settlement of a multi-year regulatory investigation by paying a fine in an amount different than what is recorded in the financial statements
C		a decline in the fair value of securities held for resale
D		the uninsured loss of inventories as a result of fire

Please answer each multiple choice question.