L19 Notes_Part_6 - materiality threshold and both...

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Contingent Liabilities: SFAS No. 5 Accrue Disclose Nothing Disclose Disclose Nothing Probable Reasonably Possible Remote Possibility Reasonably Estimable Not Reasonably Estimable
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Attorney letter: Lawyer Inquiry 1 . Is attorney’s response limited (Yes go to 5)? 2. Is loss probable? (No, go to 4) 3. Is it reasonably estimatible? Yes -> accrue; No -> footnote it 4.Is it reasonably possible? Yes -> footnote it; No -> ignore 5.Did the auditor and attorney reach an understanding on the
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Unformatted text preview: materiality threshold and both understand that the scope of the letter is limited to those items exceeding that threshold? Yes -> Not a scope restriction; No continue 6.Is the litigation in the attorneys area of expertise? No -> no scope restriction; Yes -> Continue 7. Has the attorney devoted substantive attention to the case? No -> no scope restriction; Yes -> issue a disclaimer...
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L19 Notes_Part_6 - materiality threshold and both...

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