Ashville & Company, CPAs are auditing the financial statement of the BarX Company. As the firm nears the audit completion date, Ashvilles lead partner needs to evaluate whether all material contingencies under FASB ASC 450, Contingencies, are properly accounted for and disclosed in BarX Companys financial statements. Because of its size, BarX and retained external legal counsel (Frosted & Flakes LLP) to handle BarXs various legal matters

Required:

(a) List some common procedures Ashville & Company will perform with respect to BarXs litigations, claims and assessments.

(b) Attorney letters are used to provide corroboration of litigations claims and assessments against BarX. Briefly describe the process through which attorney letters are prepared, sent and used in the audit. What information is usually included in an attorney letter?