Discuss three audit procedures commonly used to search for contingent liabilities.

Discuss three audit procedures commonly used to search for contingent liabilities.


Answer:

Inquire of management (orally and in writing) about the possibility of unrecorded contingencies.
Review current and previous years’ internal revenue agent reports for income tax settlements.
Review the minutes of directors’ and stockholders’ meetings for indications of lawsuits or other contingencies.
Analyze legal expense for the period under audit, and review invoices and statements from legal counsel for indications of contingent liabilities.
Obtain a letter from each major attorney performing legal services for the client as to the status of pending litigation or other contingent liabilities.
Review audit files for any information that may indicate a potential contingency.
Examine letters of credit in force as of the balance sheet date and obtain a confirmation of the used and unused balance.

Comments

Popular posts from this blog

Examine the collapse of Han. What factors explain how this occurred? How influential in Han Dynasty on Chinese History?

Summarize effective communication strategies in organizational hierarchies, and review the role and relevance of the organizational grapevine

Describe at least three of the general information skills essential for all business careers.