level: Lawyer's Letter
Questions and Answers List
level questions: Lawyer's Letter
| Question | Answer |
|---|---|
| What is an 'Asserted Claim'? | Means that someone has already filed a claim or has at least announced the intention to make such a claim |
| What is an 'Unasserted Claim'? | Means that the entity has exposure to litigation, but no one has yet announced an intention to sue |
| Can a lawyer inform the auditor about any omissions or unasserted claims? | No, the American Bar Association prohibits lawyers from disclosing any omissions or unasserted claims to an Auditor. However, lawyers must tell their client about any such omissions and request that client management then inform the auditors |
| Under GAAP, when must an asserted claim be accounted for on the books? | When Probable and Reasonable that a material unfavorable outcome will occurr |
| Limitations placed by a client for a lawyer's inquiry from an auditor, can create what type of opinion in the auditor's report | Modified Opinion - Management's refusal to cooperate with the auditor in obtaining a lawyer's letter would be considered a limitation on the scope of the audit that would result in a modified opinion |