An auditor is reviewing the minutes of board meetings for a nonissuer. The auditor discovers that the company is a defendant in a patent infringement lawsuit filed two weeks before year-end. Management did not disclose this to the auditor. This discovery most likely affects the auditor's assessment of:

Answer options:

Valuation of legal expenses.

Completeness of litigation, claims, and assessments.

Rights and obligations of the patent.

Occurrence of legal fees.

How to approach this question

Link the procedure (reviewing minutes) to the assertion (Completeness - finding things that were left out).

Full Answer

B.Completeness of litigation, claims, and assessments.✓ Correct

Completeness of litigation, claims, and assessments.

The primary objective of reviewing board minutes and inquiring about litigation is to ensure the Completeness of the disclosures regarding litigation, claims, and assessments. Finding an undisclosed lawsuit indicates a risk that the liability/disclosure is incomplete.

Common mistakes

Focusing on valuation before establishing completeness.

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