In conducting the audit of HIJ Company, the auditors want to provide for any potential loss contingencies. During their examination the following events occurred:

1. After sending a letter to the companys attorneys, and following up with several calls, no one from the law firm responded to their request.

2. A dispute with the IRS two years ago was never resolved.

3. The auditors have an inclination that the owner of HIJ was having his personal notes endorsed (or guaranteed) by the company.

4. During a cash-flow crunch at the beginning of the year, HIJ sold roughly $250,000 in notes receivable with recourse.

Please briefly discuss each of the above items, and how the auditors ought to respond to each.