Sunday, September 30, 2012

Audit recommendations on reviewing legal expenditures

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:
    Audit recommendations on reviewing legal expenditures
  1. 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]
  2. To examine further if there's imprecise and insufficient descriptions on the billings from the lawyers.
  3. 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.
  4. 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)
  5. 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. 
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