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During the audit of the Merrill Manufacturing Company, Ralph Pyson, CPA, has become aware of four lawsuits against the client through discussions with the client,

During the audit of the Merrill Manufacturing Company, Ralph Pyson, CPA, has become aware of four lawsuits against the client through discussions with the client, reading corporate minutes, and reviewing correspondence files.

How should Pyson determine the materiality of the lawsuits and the proper disclosure in the financial statements?

Does this create any further audit tests?

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