This article prefer to share with our Accounting & Auditing blogs visitors on a number of recommendations while performing the overview of audit client's legal expenditure account, are the following:
- Evaluate the invoice & billing details sent by the audit client's lawyer to distinguish any law suits / legal actions that's contrary to the audit client [ take note: disclosure is necessary in the financial statement, when the exposure is material]
- To examine further if there's imprecise and insufficient descriptions on the billings from the lawyers.
- Evaluate the engagement letter / contract entered straight into by audit client with the lawyers to find out how comprehensive the firms’ fee bills ought to be.
- From internal control viewpoint, audit client should have sufficient and constant policy for examining legal fee bills whenever they came in. ( i.e. identifying the verifier and evaluators of the legal fee bills, and others)
- Make sure you attain verification from audit client's lawyer on the on-going legal cases/ law suits to recognize if there's any material exposure.
