Appendix A of AS 1105, Audit Evidence, applies when an auditor uses the work of a firm`s lawyer as audit evidence in matters relating to legal expertise, excluding litigation, claims and valuations (which fall within the scope of this standard) and income taxes. For example, Appendix A of AS 1105 applies when a legal interpretation of a contractual term or legal opinion to isolate the transferred financial assets is necessary to determine the appropriate accounting or information in the applicable accounting framework. Paragraph 7 also recognises that it may be in the client`s interest to protect, if and to the extent possible, the information contained in the lawyer`s reply to the statutory auditor against unnecessary disclosure or use beyond the intended purpose of informing the statutory auditor. For example, the response may contain information that could impede efforts to resolve a pending dispute described in the response. The requirement for consent to further disclosure or reasonable notice where disclosure may be required by legal process or may be necessary to defend the audit is intended to give counsel an opportunity to consult with the client on whether consent should be withheld or restricted or, in the case of legal proceedings or the auditor`s defence of the audit: whether steps can and should be taken to challenge the need for further disclosure or to take protective measures in this context. It is assumed that the proposed twenty-day advance standard would normally be a reasonable minimum period of time for this purpose. (4) Limited Responses. If the lawyer reserves his answer in accordance with the policy statement, this must be indicated in his answer (see paragraph 8). If, in any other respect, the lawyer does not undertake to reply or comment on certain aspects of the request when replying to the statutory auditor, he or she should consider informing the statutory auditor that his or her response is limited in order to avoid concluding that the lawyer has replied to all aspects; Otherwise, he can assume a responsibility that he did not foresee. “probable” – An adverse outcome is normally “likely” if, but only if, the investigation, preparation (including factual development and legal research) and progress of the case have reached a stage where a judgment can be rendered, taking into account all relevant factors that may influence the outcome, it is extremely doubtful that the Client will prevail. In recognition of this ethical obligation, counsel must take care to fully disclose to their client any trust, secrecy or examination that is to be disclosed to others, including the client`s auditor, and to ensure that the officer or representative of a client firm who consents to disclosure understands the legal consequences and has the authority to give the necessary consent. If, in the opinion of counsel, considerations of professional judgment relate to a particular case of loss to the extent necessary for an informed assessment, counsel may, in appropriate circumstances, communicate to the auditor his or her view that an adverse outcome is “probable” or “remote”, applying the above meanings. The absence of such judgment should not mean that the client will not prevail.10 In special circumstances, the statutory auditor may receive an answer at a conference on the matters covered by the audit letter, which gives him the opportunity for a more detailed discussion and explanation than a written answer.

A conference may be appropriate if the assessment of the need to consider or disclose disputes, claims and assessments includes issues such as assessing the impact of legal advice on outstanding legal issues, the impact of unconfirmed information or other complex judgments. The statutory auditor should adequately document conclusions on the need to recognise or disclose disputes, receivables and valuations. Footnote 1 This section replaces the commentary “Lawyers` letters”, January 1974 (section 1001), and the interpretation of section 560.12 on lawyers` letters, January 1975 (ss. 9560.01-.26). It amends paragraph 560.12(d) to read: “Ask the client`s lawyer about disputes, claims and assessments (see section 337).” Since the lawyer`s answer is limited to questions concerning his professional activity as a lawyer, this answer must not contain information about the client that the lawyer receives in another capacity. In particular, a lawyer who is also a director or officer of the client would not include information obtained as a director or officer, unless the information was also obtained in his or her capacity as legal counsel in the course of his or her professional practice (or, if the dual role did not exist, it would normally be received). If the auditor`s inquiry is addressed to a law firm as a partnership, the firm may legitimately assume that its response does not contain any information disclosed to the individual concerned in the course of his or her work as a director or officer of the client. The question of the duty of the individual in his or her role as director or officer is not dealt with here.

`A paragraph “subject to an audit opinion” or “other than an audit opinion” in which these formulations refer to the scope of the audit and indicate that the statutory auditor has not been able to ascertain any material element of the financial statements shall be included in the certificates submitted to the Commission in connection with the offer of securities to the public: Unacceptable. The `subject to` restriction is appropriate when reference is made to a middle paragraph or footnotes explaining the status of issues that cannot be resolved at the time of the statement. The considerations of the difficulty of estimating damage (or margin) in ongoing litigation are obviously even more compelling in the case of unpresented potential claims. In most cases, the lawyer will not be able to provide the auditor with such a cost estimate. The client must comply with all of its disclosure obligations in a timely manner, including appropriate disclosure of property damage cases, and to the extent that substantial attention is given to these matters in the form of legal advice, the lawyer has, if his mandate is to advise his client on a disclosure obligation, the responsibility to advise the client on his obligations in this regard. While lawyers who normally limit themselves to one area of law such as tax, antitrust, patent or admiralty law, unlike lawyers who are consulted on general SEC or general corporate matters, are not expected to provide general advice on the client`s disclosure obligations in relation to a matter on which the lawyer is working, the Legal Specialist should advise the Client with respect to the Client`s obligations under FAS 5 to the extent provided herein. Regardless of their legal specialization, lawyers must be aware of their professional responsibility to the client, which is described in paragraph 6 of the Disclosure Policy Statement. Some letters of investigation explicitly mention the intention to quote the lawyer`s response verbatim or to include it in the footnotes to the client`s financial statements, and others may be concluded. Given that the client`s perspectives in ongoing litigation may be postponed due to interim developments and that counsel should be able to review the footnote in its entirety, it seems desirable to limit the use of counsel`s response. Paragraph 7 provides for such a restriction. 7The refusal to answer must be distinguished from the impossibility of drawing a conclusion on certain questions of judgment (paragraph 14). In addition, attorneys outside the United States sometimes follow the practices contemplated in this section to the extent that procedures other than those described here may be required.

In such circumstances, the statutory auditor should determine, at his or her sole discretion, whether alternative methods are appropriate to meet the requirements of this Section.01 This section provides guidance on the procedures that an independent statutory auditor should consider in order to identify disputes, complaints and valuations and to ensure accounting and disclosure on these matters when conducting an audit. in accordance with PCAOB standards. The lawyer may also be asked to estimate the amount of the potential loss or the extent of the loss in dollars in case an adverse outcome is not considered “removed”. In such a case, it is generally as impossible to determine with some degree of certainty the amount or extent of the potential injury as the outcome of the dispute.