Background Rossi Inc. is a diversified manufacturer of industrial products. In 2008, Rossi updated its asbestos litigation liability, including the costs of settlement payments and defense costs relating to currently pending claims and future claims projected to be filed against the Company through 2017 for losses incurred to date. Before 2008, the Company’s previous estimate was for claims projected to be filed through 2011. As part of the 2008 update to the asbestos litigation liability, Rossi engaged Thompson and Associates, a consulting firm, to serve as an external specialist to estimate the claims liability for December 31, 2008. As a result of the 2008 update and the external specialist claims estimate, the Company significantly …show more content…
Even though the minimum amount in the range is not necessarily the amount of loss that will be ultimately determined, it is not likely that the ultimate loss will be less than the minimum amount.” Application According to the Internal Actuarial Specialist Report, the estimated cost of litigation ranges from $907 million to $1,514 million. Accounting Standards Codification 450-20-30-1 says that Rossi Inc. must accrue the lower amount of the range which is $907 million. The company must also create a disclosure note acknowledging that it is possible the litigation liabilities could cost as much as $1,514 million if the excess is reasonably probable. Research Question: What additional audit procedures, if any, should you suggest to the engagement partner in order to evaluate the appropriateness of the asbestos litigation liability as of December 31, 2009? Relevant Literature Statements on Audit Standards No. 12- AU section 337 Paragraph 6 & 7 “.06 An auditor ordinarily does not possess legal skills and, therefore, cannot make legal judgments concerning information coming to his attention. Accordingly, the auditor should request the client 's management to send a letter of inquiry to those lawyers with whom management consulted concerning litigation, claims, and assessments. .07 The audit normally includes certain other procedures undertaken for different purposes that might also disclose litigation, claims, and assessments. Examples of such procedures
What services do you offer? Will I have a formal written agreement or contract with you? What if I can 't afford to pay your fees or make contributions? In addition to helping me solve my immediate problem, will you help me develop a plan for avoiding problems in the future?
To begin the audit, a review of previous 2 years of financial statements, provided by current or previous auditors for any unusual business transactions relating to revenue.
While there are those who may be uncomfortable with the idea that worship is a goal in making disciples, the goal of Christian education according to Mitchell is to make a disciple who worships Jesus. Mitchell points out that worship is more than just showing up at church on Sunday morning for an hour of corporate worship. He points out that worship according to John 4:19 -24 goes much deeper than just that time of corporate worship that we often think of as
Even though the minimum amount in the range is not necessarily the amount of loss that will be ultimately determined, it is not likely that the ultimate loss will be less than the minimum amount. “
1. A liability, estimated at $157,050 at December 31, 2012, was settled on February 26, 2013, at $175,160.
Claims in the US have been relentlessly expanding in the late years since 1990. To date, there are more than 500,000 reported claims against many litigants. Furthermore, in light of the fact that a claimant ordinarily records his lawsuit against a few organizations, there is an archived confirmation of more than 300,000 claims from each of the numerous asbestos fabricating organizations.
As I anticipated and previously advised you of my prediction on the issue, the Court is allowing the plaintiff to appear for her deposition after the court deadline and has recommended that the parties cooperate with each other. We are taking Lauren Cherny’s deposition tomorrow and Roger Castino is meeting me on March 2 for the inspection. We will incorporate Ms. Cherny’s testimony and Roger’s opinion into our evaluation of the potential damages and the likelihood of a verdict against us. Your insurer, USLI, will use our evaluation as one of several factors considered in determining what to offer in this case, but keep in mind that it prefers to settle cases rather than pay its attorneys to try cases. At this time, I do not know what the
The “nature of the good life” from a philosophical point of view is not as simple as the typical picture that may pop into one’s head of lying on a beach in a tropical paradise sipping frozen daiquiris. Depending on which type of ethical model you use will change the picture. For Thucydides his view point seems to be that “Might is Right” versus Plato’s “Might for Right” as well as a search for what is right. Another way to differentiate the two would be to say one is for what I have the right to do and that makes it right verses what is the right thing to do and what makes it right.
2. Auditors are required to consider evidence obtained and accumulated throughout the audit and make an overall evaluation as to whether substantial doubt exists with respect to the ability of the client
Drafting the audit opinion and any other reports to be issued under the terms of engagement e.g. the management letter.
For example, the auditors did perform the audit and documented their findings, yet did not challenge management to obtain supporting evidence with regards to the loan collateral, the collectability of loans, and weakness in internal controls. Furthermore, with regards to the weakness in internal controls, the auditors were concerned, made recommendations yet were unable to give voice to values and influence management. For instance, management argued that the five percent reserve for loan losses that was proposed by the auditors was too high and was able to convince them to agree to a two percent loan
a. Discuss types of information that may indicate substantial doubt about a client’s ability to remain a going concern.
Many readers of financial statements believe that auditors have a responsibility to detect all errors, fraud and illegal acts. This is not true. The auditor has a responsibilities to plan and perform the audit to obtain reasonable assurance about whether the financial statements free of material misstatement, whether caused by error or fraud.
1.2 An analysis of the performance of the company based on various financial ratios for the past 5 years. (P4.3)