SPR Ltd has been into the media business since 2001. During the F.Y 2022-2023, many notices were received by the company for hurting public…

CA Intermediate · Auditing and Ethics · RTP · May 2024
SPR Ltd has been into the media business since 2001. During the F.Y 2022-2023, many notices were received by the company for hurting public sentiments and financial claims were filed against the company. As an auditor of the company, you requested the management for arranging the meeting with company's external legal counsel. Management is of the view that such meetings are necessary in certain circumstances only. Can you list down such circumstances?

Suggested Answer and Working Notes:

Circumstances when it becomes necessary to meet with company's external legal counsel: In the given case of SPR Ltd., Auditor requested the management for meeting with SPR's external legal counsel. In certain circumstances, the auditor also may judge it necessary to meet with the entity's external legal counsel to discuss the likely outcome of the litigation or claims. This may be the case, for example, where: (i) The auditor determines that the matter is a significant risk. (ii) The matter is complex. (iii) There is disagreement between management and the entity's external legal counsel. Ordinarily, such meetings require management's permission and are held with a representative of management in attendance.

Topics: Audit Evidence

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