AU 337: Inquiry of a Client’s Lawyer Concerning Litigation, Claims, and Assessments
AU-C 501: Audit Evidence—Specific Considerations for Selected Items
AU EFFECTIVE DATE AND APPLICABILITY
|Original Pronouncement||Statement on Auditing Standards (SAS) 12.|
|Effective Date||This standard is now effective.|
|Applicability||Audits of financial statements in accordance with generally accepted auditing standards (GAAS).|
AU-C EFFECTIVE DATE AND SUMMARY OF CHANGES
SAS No. 122, Codification of Auditing Standards and Procedures, is effective for audits of financial statements with periods ending on or after December 15, 2012.
AU-C 501 combines the requirements and guidance from extant AU Section 331, Inventories; 332, Auditing Derivative Instruments, Hedging Activities and Investments in Securities; and 337, Inquiry of a Client’s Lawyer Concerning Litigation, Claims, and Assessments.
AU 337.06 states, in part, “the auditor should request the client’s management to send a letter of inquiry to those lawyers with whom management consulted concerning litigation, claims, and assessments.” AU-C 501 takes a more principle-based approach. AU-C 501.18 requires the auditor to seek direct communication with the entity’s external legal counsel (through a letter of inquiry) if the auditor assesses a risk of material misstatement regarding litigation or claims, or when audit procedures performed indicate that material litigation or claims may exist.
AU-C Section 501 supersedes Appendix—Illustrative ...