Your client has returned to you the representation letter that they sent to their lawyer. The letter contains the following statement from the client's lawyer:
"the directors seem to underestimate the likelihood of losing the case, and the potential financial settlement amount. We believe that there is little chance of successfully defending the matter, and expect that there will be amounts payable in the vicinity of $3.million, not $1.million. We do however remind you that the matter is only in preliminary stages and could still go either way".
Has the auditor collected this evidence in the appropriate way? What should the auditor do in regards to the information provided by the lawyer?

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The Answer of Your client has returned to you the representation letter that they sent to their lawyer. The letter contains the following statement from the client's lawyer:
"the directors seem to underestimate the likelihood of losing the case, and the potential financial settlement amount. We believe that there is little chance of successfully defending the matter, and expect that there will be amounts payable in the vicinity of $3.million, not $1.million. We do however remind you that the matter is only in preliminary stages and could still go either way".
Has the auditor collected this evidence in the appropriate way? What should the auditor do in regards to the information provided by the lawyer?

Your Client Has Returned to You the Representation Letter That