Introduction: Audit firms are organizations that conduct audit engagements. An audit firm may have more than one auditor in the form of its partners. The audit engagements are signed by any partner of the firm.
To identify: Whether the given statement is true or false.
Answer to Problem 1TFQ
The given statement is false.
Explanation of Solution
An audit firm conducts audit engagements of their clients and it is usually not likely to face litigation costs. Audit firms keep the documentation of each process of audit engagement and conclusions are drawn. The recording of sufficient documents and pieces of evidence reduced the risk of future litigations which is why the audit firm is not likely to see the litigation costs as the highest single cost. Hence, the given statement is false.
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Chapter 4 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
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