State three lists or requests that should be included in a standard “inquiry of attorney” letter.

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State three lists or requests that should be included in a standard “inquiry of attorney” letter.


Answer:

• A list, prepared by management, of (1) pending threatened litigation and (2) asserted or unasserted claims or assessments with which the attorney has had significant involvement. An alternative is for the letter to request the attorney to prepare the list.
• A request that the attorney furnish information or comment about the progress of each item listed, the legal action the client intends to take, the likelihood of an unfavorable outcome, and an estimate of the amount or range of the potential loss.
• A request for the identification of any unlisted pending or threatened legal actions or a statement that the client’s list is complete.
• A statement by the client informing the attorney of his or her responsibility to inform management whenever in the attorney’s judgment there is a legal matter requiring disclosure in the financial statements. The letter of inquiry should also request the attorney to respond directly to the auditor that he or she understands this responsibility.
• A request that the attorney identifies and describes the nature of any reasons for any limitations in the response.

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