ASA 508 - Enquiry Regarding Litigation and Claims - April 2006
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Main Features
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.
This Auditing Standard:
(a) requires the auditor to obtain sufficient appropriate audit evidence regarding the identification of legal matters;
(b) requires the auditor to request management to obtain a representation letter from the entity’s lawyers as a means of acquiring sufficient appropriate audit evidence for the identification and existence of litigation by or against the entity; and
(c) includes additional follow up procedures, which the auditor ordinarily pursues, when a lawyer’s response to a representation letter is either not received or the response is incomplete.