14 -- Evidence—Key Considerations

14 -- Evidence—Key Considerations - CPA...

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CPA AUDITING - STUDY UNIT 14 Evidence Key Considerations: Core Concepts A. Substantive tests prior to the balance sheet date may permit early consideration of significant matters affecting the statements, such as understanding internal control and assessing control risk. Applying substantive tests at an interim date may increase audit risk, but risk can be controlled if the substantive tests for the remaining period can be designed to provide a reasonable basis for extending audit conclusions drawn from tests of details at the interim date. B. Inquiry of a client’s lawyer concerning litigation, claims, and assessments. The auditor should obtain evidence relevant to circumstances indicating an uncertainty as to possible loss, the period in which the underlying cause for legal action occurred, the probability of an unfavorable outcome, and the amount or range of potential loss. A letter of audit inquiry to the client’s lawyer seeks evidence about unasserted claims and assessments as well as matters
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This note was uploaded on 08/29/2010 for the course CBEAM AUD taught by Professor Gleim during the Spring '10 term at De La Salle Lipa.

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