Question

Which of the following types of information is not a type of evidence that the auditor should obtain concerning contingencies?

a. Information about major contracts in which contingencies may be present.

b. Documentation of communication with internal and external legal counsel of the client.

c. Accounts receivable confirmations.

d. Documentation of contingent liabilities contained in corporate minutes, correspondence from governmental agencies, and bank confirmations.

Answer 1

Accounts receivable confirmations are not evidence that an auditor should seek concerning contingencies; instead, they look for contracts, legal communications, and documentation of contingent liabilities.

Step-by-step explanation:

The type of information that is not a type of evidence an auditor should obtain concerning contingencies is c. Accounts receivable confirmations. When auditing, an auditor focuses on obtaining evidence such as information about major contracts, communication with legal counsel, and documentation of contingent liabilities (which might be found in corporate minutes, correspondence from governmental agencies, and bank confirmations). These pieces of information are crucial for assessing potential obligations that could impact the financial statements. Accounts receivable confirmations, however, are used to verify the existence and accuracy of amounts owed to the client by its customers and do not directly relate to contingencies.