Question

Which of the following procedures would a cpa most likely perform in the planning a financial statement audit?

A. Compare financial information with nonfinancial operating data.
B. Make inquiries of the client's lawyer concerning pending litigation.
C. Confirm A/R balances with customers.
D. Recalculate the prior-years' accruals and deferrals.

Answer 1

Correct answer is B, make inquiries of the client's lawyer concerning pending litigation

Step-by-step explanation:

During an Audit Planning, an auditor will undergo into certain phases:

1. Understanding the client and the business

2. Determining strategy to perform ( making risk and materiality assessment)

3. Determining the type of evidence to collect based on the risks level

Based on the above-mentioned phases, Making inquiries of the client's lawyer concerning pending litigation is part of understanding the client and the business. An auditor must also know the events or transaction that might result into legal liability of the client.

The rest of the choices is part of performing the audit procedures conducted by an auditor to obtain suffecient audit evidence.