Section Introduction - ASA 508 - Enquiry Regarding Litigation and Claims - April 2006 - Introduction

Introduction

4 The purpose of this Auditing Standard is to establish mandatory requirements and provide explanatory guidance on obtaining sufficient appropriate audit evidence regarding legal matters affecting the entity. In particular, this Auditing Standard identifies the appropriate method of communication with the entity’s lawyers in connection with litigation by or against the entity.

5 The auditor shall obtain sufficient appropriate audit evidence regarding:

(a) whether all material legal matters have been identified;

(b) the probability of any material revenue or expense arising from such matters and the estimated amount thereof; and

6 “Legal matters” means matters referred to lawyers by an entity relating to pending or potential litigation which may result in actual or contingent liabilities, and other matters referred to the entity’s lawyers which may affect the financial position or the results of the entity’'s operations.

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