In this lesson, Nick Palazzolo discusses the audit procedures regarding pending litigation and how to determine what should be recorded or disclosed. He explains the auditor's role in inquiring about management's processes for evaluating litigation, obtaining descriptions and evaluations of litigation claims and assessments from management, and reviewing various documents related to litigation. Additionally, communication with the client's legal counsel is addressed, along with potential limitations and issues that may arise, such as confidentiality and attorney-client privilege. The lesson also covers key points of inquiry when the auditor reaches out to the client's legal counsel and provides an example of communication in relation to pending litigation matters.
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